Caspian Report - Issue: 07 - Spring 2014

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emın akhundzada 114 First, it should speed up reforms in the energy market and invest in natural gas infrastructure. The market was controlled entirely by the state-owned company BOTAS until 2001. With the enactment of Law No. 4646 in 2001, four more companies entered the market, leading to a degree of market liberalisation. However, the contract transfers have not reached the target anticipated by the Law no. 4646. In fact, 80% of the market is still being controlled by BOTAS and the rest is not fully independent. The fact that BOTAS determines the prices prevents the creation of a competitive environment and creates a monopolistic structure. At this point, it is crucial to reduce BOTAS’s share in the market through various methods, to liberalise imports and to evaluate the developments related to LNG activities in the transition to a more competitive structure. Reforms to be made in liberalisation period will not only create competition in the domestic market, but also strengthen Turkey’s position in terms of international natural gas markets. Second, one of the necessary conditions of becoming an energy hub is constructing large natural gas pipeline networks. Currently Turkey has a high pressure natural gas transmission network of around 15,000 km, and the household penetration rate is approximately 50-55%. Furthermore, pipelines in Turkey are only laid down in one direction, and it is not possible to reverse the flow of natural gas when the need arises. For comparison, the state of Texas has a 50,000 km pipeline network. The US as a whole has 850.000 km. In this regard, Turkey should build interconnected pipelines in different directions and spread this pipeline network across all of its territory. At the same time, there should be a single pipeline regulatory system that should be administrated transparently. Third, Turkey’s underground natural gas storage facilities are still insufficient. Although Turkey’s growth rate of natural gas consumption is the second highest in the world after China, in terms of natural gas storage capacity against consumption volume it lags far behind other countries in Europe. Natural gas storage facilities are critically important. Buying and storing surplus natural gas enables countries to continue uninterrupted natural gas transmission when the demand is high and supply is problematic. Although Turkey ensures 44% of its electricity generation by natural gas and imports 98% of its natural gas consumption, natural gas storage capacity only meets 5% of annual consumption, risking the interruption of electricity supply during the cold winter months where demand is higher. At the moment, Turkey has 2.6 bcm usable storage capacity and 1 bcm is in the process of construction. This capacity should be increased to 10 billion cubic meters in the short term and 20 billion cubic meters in the midterm. In addition, storage facilities should not be constructed only in certain regions; they should be built across multiple locations parallel to the pipelines, both large and small. This will enable natural gas flow from the places where demand is low to the places where the demand is high.
Fourth, the private sector should be encouraged to build storage facilities. Currently, storage facilities in Turkey belong to the government and therefore there is a capacity shortage. Fifth, the country should establish an Energy Stock Exchange. The Stock Exchange will liberalise the pricing structure, and pave the way for a supply and demand balance. To sum up, if Turkey makes effective use its geopolitical position, it can realise its vision of becoming an energy hub. To achieve this aim, it must: hasten its energy market reforms; pave the way for the development of a liberal market structure; enlarge pipeline network system; and invest more in natural gas infrastructure. 115 CASPIAN REPORT, SPRING <strong>2014</strong>
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CASPIAN Report 2 The urgent need to
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AHMET YUKLEYEN 6 Afghanistan’s Un
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AHMET YUKLEYEN 10 want to face the
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AHMET YUKLEYEN 12 In short, ANF has
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Matteo Verda 22 CONTRIBUTION OF Tra
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Matteo Verda 24 TAP will be a 760 k
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SHAREHOLDER STRUCTURE OF TAP Matteo
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Matteo Verda 28 Azerbaijani gas wil
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Matteo Verda 30 In the end, the via
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Aura Sabadus 32 Southern Gas Corrid
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Aura Sabadus 44 The Southern Gas Co
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Davide Tabarelli 46 Environmental e
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Davide Tabarelli 48 evaluate potent
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Davide Tabarelli 52 of some 200 mil
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Iran Nuclear Negotiations and Turke
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Mehmet AkIf Okur 56 posal stated th
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Iranian President Hassan Rouhani an
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Mehmet AkIf Okur 60 The steps that
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Page 90 and 91: AntonIo SIleo 88 ductant chemical r
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Page 94 and 95: Radu Dudau 92 Romania’s Energy St
Page 96 and 97: Radu Dudau 94 countries pay for Rus
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Page 102 and 103: Radu Dudau 100 In October 2013, the
Page 104 and 105: Radu Dudau 102 In spite of the ling
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Page 108 and 109: Why World Oil Prices Should Be High
Page 110 and 111: Luay Al-Khatteeb 108 for $1 of reve
Page 112 and 113: emın akhundzada 110 Turkey as an E
Page 114 and 115: emın akhundzada 112 markets. Given
Page 118 and 119: FatIh Ozbay 116 Discussions about V
Page 120 and 121: FatIh Ozbay 118 The Black Sea is a
Page 122 and 123: FatIh Ozbay 120 these two countries
Page 124 and 125: FatIh Ozbay 122 Montreux is quite s
Page 126 and 127: MUbarIz Hasanov 124 Some Remarks on
Page 128 and 129: Turkey will be USD 37 billion highe
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Caspian Report - Issue: 07 - Spring 2014

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