Households buy the most gas, followed by industry and power stations.[9] Over 80% of the population has access to gas,[10] and it supplies half the country's heating requirements.[4] As the state owned oil and gas wholesaler
BOTAŞ has 80% of the gas market,[2]: 16 the government can and does subsidize residential and industrial gas consumers.[11] All industrial and commercial customers, and households using more than a certain amount of gas, can switch suppliers.[2]
The
General Directorate of Mineral Research and Exploration was formed in 1935, but very little gas was found.[13][14] The most efficient way of importing gas is by pipeline from nearby countries, and the first imports were from Russia in 1986, followed by Iran.[15] However the pipeline from Azerbaijan only started in 2007.[15]
Liquefied natural gas (LNG) was first imported from Algeria in 1994 and from Nigeria in 1999.[15] In the early 21st century gas consumption increased.[16]: 9 Between 2000 and 2020 the share of imported energy increased from just over 50% to 70%.[17]
In 2019, the
European Council objected to Turkish drilling in the eastern
Mediterranean.[18] In 2022 a gas shutoff by Iran caused problems for industry.[19] Some analysts say that Turkey does not have enough gas storage or alternative supplies to resist pressure, and that when Russia says it is closing a gas pipeline for maintenance (for example a 10-day shutdown of Bluestream in 2022 at 2 days notice) this is sometimes intended to apply political pressure.[20] In 2022 the
increase in global gas prices increased the
current account deficit as more gas was bought on the
spot market.[12]: 15
Turkey intends to increase the share of
renewables and
nuclear power in the national energy mix.[33] According to a May 2022 report from
thinktankEmber, solar and
wind saved 7 billion US dollars on gas imports in the preceding 12 months.[34] Some distribution companies are testing mixing up to 20%
hydrogen with natural gas, so that eventually some of the gas distributed would be
green hydrogen.[35][36]
Earthquakes can be a danger to
pipelines.[37] In neighbouring
Iran electrification, for example with heat pumps, away from gas has been suggested to improve earthquake resilience.[38]
Supply and demand
Supply
There are many sources of supply in the region and enough LNG import capacity in the country.[39]
In 2020
Fatih, one of five
drillships belonging to state owned oil and gas company
TPAO, discovered the
Sakarya Gas Field under the
Black Sea near where
Romania has also found gas.[40] Before 2023, when production from this
sweet gas field in the Black Sea started, almost all natural gas consumed in Turkey was imported.[41][42]South Akcakoca Sub-Basin (SASB) is a small gas field also in the Black Sea.[43] As well as drillships there are 2 seismic ships.[44] Turkish Black Sea reserves are estimated at a trillion cubic metres:[45] gas will be piped to
Filyos for
processing to make it suitable for the gas grid,[46] with peak production of 40 billion cubic metres (bcm) targeted for 2026.[47] Turkish Black Sea gas is expected to eventually meet almost a third of national gas demand,[48] with 15 billion cubic metres (bcm) annually by 2030.[49] According to some commentators, with this discovery, the
Aegean dispute with Greece over exploratory drilling is now unnecessary.[50]
Almost half of the country's gas is imported from
Russia.[5] Turkey's long-term contracts with Russia are due to expire at the end of 2024,[51] and the natural gas import bill is expected to fall during the late 2020s due to the start of production from Turkey's part of the Black Sea.[52] In 2021 contracts with Russian energy company
Gazprom were renewed and linked to
the EU price;[53] they included a four-year deal to the end of 2025 for 5.75 bcm a year through
TurkStream (which has total capacity 31.5 bcm).[54] The contract price has not been published but was reported (in 2022 by media opposed to the Turkish ruling parties) to be based on 70% of the LNG spot market price plus the
Brent Crude oil price: this is much more expensive than the Blue Stream gas.[55] In 2022 some LPG was also imported from Russia.[56]
US sanctions on Iran do not apply to pipeline imports of gas.[2]: 139 LNG import share varies but typically about a quarter of gas imports are LNG.[12] Total spot import was 6.9 bcm in 2021: spot can also be imported by pipeline.[44] Total entry capacity in 2021 was 362 mcm/day.[44] BOTAŞ would like to import from Northern Iraq, but completing the Iraqi part of the pipeline is mired in disputes between the
Iraq central government and
Kurdistan Regional Government.[57] However some
gas in Iraq is wasted by
flaring so Iraq would benefit by selling that.[58] Turkey suspects winter cuts in long-term low-price contracted supply from Iran are not technical faults but Iran keeping the gas for its own use.[57]
In 2021 a contract was agreed with Azerbaijan to import 11 bcm more per year until the end of 2024.[59] TPAO has a 19% share in
Shah Deniz 1.[60]Frackingshale gas might help with energy security.[61] Gas supply from
Turkmenistan has been planned for decades but a
pipeline under the Caspian Sea has not yet been built,[62][63]partly due to lack of an agreement between Turkmenistan and Azerbaijan.[64] Turkmenistan is sending more gas to China.[65] Transit via Iran is technically possible as there is spare pipeline capacity.[49] However this is said (by backers of a rival route between at sea installations) to be only 3 bcma.[66] LNG is imported from several countries including Egypt, Algeria and the United States.[67]
Demand
Over 80% of the population, and all
provinces in Turkey, have access to natural gas,[10] which supplies half of household final energy.[68] Households buy the most gas, followed by industry and power stations.[9] In 2021 consumption share included 27% households, 35% electricity production, 29% industry and 8% service sector.[44] The
Energy Ministry expects demand for gas to increase slightly to 2030, but its share of primary energy consumption to fall slightly to less than a quarter.[69]: 19–20
In some years
electricity generation in Turkey burns half the gas, but this varies greatly depending on whether there is enough rain to produce
hydroelectricity; therefore, when it rains, Turkey burns less gas.[2]: 139 Peak demand is typically in mid-winter, averaging almost 300 million cubic metres (mcm) each day,[44] and the Chamber of Engineers said in 2022 that there was not enough storage.[70] There are 72 distribution zones and 18 million households are supplied with gas.[44] About half of residential energy demand is met by gas.[2]: 139 The
International Energy Agency predicted in 2021 that use for electricity generation will decline.[2]: 140 However the national energy plan published in January 2023 forecasts over 10 GW more gas power may be needed by 2035 to balance
variable renewable energy and for
energy security.[69]: 15–16 All industrial and commercial consumers, and households buying over 75 thousand cubic-meters a year can switch suppliers.[2]
There are many gas pipelines,[67][74] and it may not be possible for Europeans to determine the origin of the gas they buy from Turkey.[75] Major gas pipelines (with capacity in bcm) are:
The Tabriz–Ankara pipeline is a 2,600-kilometre (1,600-mile) natural gas pipeline, which runs from
Tabriz in northwestern
Iran to
Ankara in Turkey. Blue Stream, a major trans-Black Sea pipeline, has been delivering natural gas from
Russia to Turkey since 2003.[78] The Southern Gas Corridor includes the Shah Deniz 2 gas field, the South Caucasus pipeline, TANAP, and the Trans Adriatic Pipeline: TANAP is being expanded to 31 bcm per year.[79] In
Erzurum, the South Caucasus Pipeline, which was commissioned in 2006, is linked to the Iran-Turkey pipeline. In 2022 Turkey's transit pipeline had 3 to 5 bcm spare capacity.[80] As gas imports cost $12 to $15 billion per year and
the lira is weak;[81] they are a significant part of the import bill.[82] Turkstream has about 60% spare capacity as of 2022.[83]
LNG can transit to Bulgaria, but there have been complaints that the deal is against EU free market rules.[84][85] Energy analysts doubt that Turkey will ever become a major gas transit country, and expect only Azeri gas transit to be significant.[86] However a few European countries, such as Serbia and Hungary, import Russian gas via Turkstream.[87] In 2021 Hungary's
MVM Group and Gazprom signed a 15-year contract for 3.5 bcm to be supplied via Turk Stream and the Transbalkans pipeline, and in 2022 Hungary agreed 0.7 bcm per year more gas from Russia via Turk Stream.[88] In 2022 about 2 bcm from Turkstream was sent to
Romania through the
Trans-Balkan pipeline,[66] and exports to
Moldova are starting in 2023.[89] Export to Ukraine through the Transbalkan has been technically possible since 2022,[90] and has been discussed between the 2 governments,[91] although Ukraine may be able to produce enough gas for its own needs.[92][93]
According to BOTAŞ the price of gas for Turkish households was the lowest in Europe in 2022,[97] and they said residential customers were getting 70% price support from the government.[98] There are 72 gas distribution companies, with over 13 million consumers.[99] There is a biennial trade fair in Istanbul.[100]
Both national gas development and BOTAŞ are subsidised by the government.[101] In 2021 households were subsidized 80 billion lira ($7 billion) for gas - about 4 times their electricity subsidy.[102] Gas imports deplete foreign exchange reserves[103] and many analysts say that imported oil and gas is a key weakness in the
economy of Turkey.[104] The country would like to become a hub to supply the EU,[105] however EU gas consumption is expected to decrease, so analyst Kadri Tastan says this is unlikely in the long term due to the
EU green transition.[106] Although already somewhat of a physical hub for gas, Turkey cannot become a trading hub as the market, which is operated by
Energy Exchange Istanbul, is not a free market.[107]
As of 2021[update] the annual gas import bill was around US$44 billion.[108] But long-term contracts with Russia and Iran will expire in the 2020s.[109] The contract to import from Iran expires in 2026.[110] Private companies are not allowed to enter into new pipeline gas contracts with countries that have contracts with the state owned oil and gas wholesaler
BOTAŞ.[2] Although private companies can contract for LNG[2] they cannot buy at the same price as BOTAŞ.[111] Some imports from Russia are linked to the oil price, for example the BOTAŞ contract for import via Blue Stream, which expires at the end of 2025.[109] Solar and wind power are much cheaper than gas power.[112] Gas prices for industry and power plants are more than double the household price,[113] and are often increased due to
falls in value of the lira.[114] In 2022 BOTAŞ borrowed from
Deutsche Bank to buy LNG.[115]
In 2023 Vitaly Yermakov, Senior Research Fellow at the
Oxford Institute for Energy Studies wrote: “Until 2022 Gazprom sales to Turkey were subject to oil-indexation, but at the end of 2021 this was replaced by hub indexation. (Turkey insisted on the change hoping it would receive lower prices, probably in reference to 2020, but has been shocked by the tremendous gas hub price spikes through the end of 2021 and into 2022 and 2023. Turkey has since asked Gazprom for a postponement of payments and begged for discounts)."[88] He also said that Turkey's negotiating power with Russia for gas discounts is greater than it was before the 2022 invasion of Ukraine.[88]: 15 A quarter of Russian gas is paid for in
rubles.[116] In late 2022 Turkey was reported to have asked Russia for a discount on gas,[117] but prices are expected to remain high until the end of 2024[118] or 2026, with the 2023 price estimated by Bloomberg at around 500 USD per thousand cubic metres (compared to 300 for Russian sales to China) only slightly falling to 2026.[119]
Subsidies and taxes
The wholesale gas market is not as competitive in Turkey as it is in the EU: some analysts say that this is because the government does not want to split up the state-owned gas company BOTAŞ, or give
other power companies fair use of BOTAŞ' pipelines.[120] They say Turkey has not joined
the European gas network (ENTSO-G) because joining would require this
unbundling.[120] BOTAŞ controls over 90% of the natural gas market,[121] and is the gas infrastructure regulator and the only operator of gas transmission.[122] Exploration for gas in the
Eastern Mediterranean is subsidised,[123][124] and is a cause of geopolitical tension because of the
Cyprus dispute.[125]
A
capacity market (or capacity mechanism) for electricity is payments to make sure that sufficient
firm power is available to satisfy peaks in demand, such as late afternoon air conditioning in August. Because
gas-fired power stations can usually ramp up and down quickly they are one way of ensuring supply at times of peak demand. Some other countries also have capacity markets but Turkey's has been criticised. The government says the purpose of capacity market payments is to secure national electricity supply.[126] However, despite almost all natural gas being imported, some gas-fired power plants received capacity payments in 2021, whereas some non-fossil
firm power, such as
demand response, could not.[126][127] 17 gas-fired power stations were eligible for capacity payments in 2023.[128]
Companies
Akfel Gas Group is state owned, and there are four private importers of gas.[20] Bosphorus Gaz, Bati Hat and Kibar Holding applied to import from Russia through the 6 bcm a year Trans-balkan pipeline in 2022, but the agreement for BOTAŞ to import gas through that pipeline ended that year.[129] Not all the 10 bcm contracted from Russia is actually flowing, possibly due to debts due to Gazprom by the companies.[20] Only BOTAŞ is importing LNG.[130] In 2022 the Turkish Energy Minister said that Turkey and
Algeria would create a joint oil and gas exploration company.[131]
^Yılankırkan, Nazile (30 June 2020).
"Shale Gases, Potential and Impacts". Journal of Amasya University the Institute of Sciences and Technology. 1 (1). Sivas Cumhuriyet University Faculty of Technology, Mechatronics Engineering Department: 37–46.
Difiglio, Prof. Carmine; Güray, Bora Şekip; Merdan, Ersin (November 2020).
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