Legislation and Transmission System Infrastructure Workshop
"Legislation and Transmission System Infrastructure Workshop" was held on 20-21 May 2014 in Ankara hosted by the Ministry of Energy and Natural Resources. The discussions during the workshop included the examination of the natural gas market from financial and legal aspects in order to make Turkey a natural gas trade center. In light of Europe's leading energy market examples, it was determined what legal and technical steps should be taken for the development of the Turkish natural gas market.
On the occasion of the "Turkey's Energy Potential and Challenges to Become an Energy Trading Center Round Table Meeting" hosted by the Ministry of Energy and Natural Resources on May 20, 2014, the liberalization of Turkey's natural gas market and the separation of BOTAS in the process of Turkey becoming a hub, and the elimination of constraints in the market were addressed. In a brainstorming session, the structure of BOTAS, price mechanisms, cross-subsidies, and constraints of being a hub were mentioned, while emphasizing the importance of privatization and liberalization of the Turkish natural gas market.
The main theme of the meeting was the liberalization of Turkey's natural gas market. PETFORM is an organization that thinks that Turkey can meet the issue of natural gas supply only through full liberalization process; There were views that were not too warm to liberalize as well as warm to this view. But the general belief was that liberalization was necessary in the natural gas market. First of all, the structure of BOTAS, which was in a dominant position in the market, was discussed. The dominant structure of BOTAŞ is a major obstacle to the liberalization of the market and according to the participants of most meetings, BOTAŞ should be decomposed as soon as possible. When the natural gas market law was enacted in 1999-2000 years, the issue of BOTAŞ's disaggregation had been discussed but the structure that was revealed at that time has lost its validity today. For this reason, in order for the market to have a liberal structure, the tasks of BOTAŞ must first be separated. A structure of three is mentioned: contracts and trade are considered as a separate structure, the transmission system as a separate structure and the warehouse as a separate structure. There are some who argue that this work should be divided into two. Besides this, BOTAS was proposed to be withdrawn from trade and defended to be divided into 9 companies. It was mentioned that the contracting company, the oil transportation company and the contracts should be structured separately as each contract had to be divided separately. However, when BOTAŞ was dismantled, it was argued that it should be done in parallel with the measures to be taken in parallel with the economic growth of Turkey in the economy.
In addition to BOTAS, the role of EMRA in the sector is also very important. EMRA has been involved in the relevant revision of the existing gas market law number 4646, which is on the agenda of the Assembly for at least 2 years. As a supervisor, the EMRA must actively act in the sector.
The separation of BOTAŞ provides both investment and supply security and is necessary to prevent cross-subsidies. It is important that the liberalization in the field of distribution in the natural gas market is concentrated especially in the field of wholesale. It was argued that besides BOTAŞ, other energy state economic enterprises should also be invested and released in terms of personnel policies. Attention was drawn to the fact that there were no participants from BOTAŞ in the meeting, and it was said that it would be useful to get their ideas. Liberalization is a precondition for becoming a natural gas trading center, the Gas Hub.
As the main objective of the project was to make Turkey a Gas Trade Center, the importance of defining Gas Hub at the meeting was emphasized. It was mentioned that the Hub could come to mean both this transit country and the market being traded, and that it should be considered in this regard. In addition to this, the conditions necessary to form a Hub are discussed: First, some conditions must be fulfilled in the market: some obstacles must be fulfilled in order to remove physical obstacles, to create storage capacities, to eliminate infrastructure deficiencies, and to make short-term transactions.
There are some restrictions in front of liberalization and therefore being a Gas Hub. The most important of these is cross subsidies. Cross subsidies prevent free-of-charge prices. A free market, however, is defined as a place where price supply freely interferes with demand. However, there are no price signals in the natural gas market, prices are very variable and this prevents entry into the market. In addition, there is a lack of a futures market indexed to the pre-day market. This leads to a drop in liquidity prices. The lack of commercial instruments in the market is a major constraint.
There are other obstacles to liberalization, such as legal obstacles. Different licenses: import license, export license or wholesale license; It leads to the prolongation of the processes and creates a constraint. Capacity constraints, another barrier in the meeting, were also addressed.
Another important issue at the meeting was supply security. Supply security is not available in the current natural gas market in Turkey. The meaning of supply security has been discussed, and serious questions have been raised about whether Turkey will provide supply: will Turkey use short contracts? What do you think Turkey is going to do to attract investments? How can Turkey provide a competitive industry? Another issue was stored. The importance of storage has been mentioned and the need for storage has been said to be far behind in the natural gas market in Turkey. At this point, it was pointed out that the storage responsibility is only in BOTAŞ and in the public, and the private sector has argued that it should bear this responsibility.
