NATURAL GAS MARKET AND DISTRIBUTION ACTIVITIES IN TURKEY

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1 ENERGY MRKET REGULTORY UTHORITY OF TURKEY NTURL GS MRKET ND DISTRIBUTION CTIVITIES IN TURKEY Burak TÜFEKÇİOĞLU ssistant Energy Expert Natural Gas Market Implemantation Department 25th of September

2 Natural Gas Contracts &Main Pipelines of BOTŞ 14 BCM lgeria+nigeria (LNG) BULGRI GREECE Kofçaz Kırklareli Tekirdağ Çan Çanakkale 5.2 BCM liağa İzmir ydın Russian Fed. (West+Turusgas) M.Ereğlisi Karacabey Bursa Balıkesir Manisa Turgutlu İstanbul İstanbul IGDŞ Bursa BOTŞ Uşak İzmit Eskişehir Zonguldak Ereğli Sakarya Bilecik fyon İzmit IZGZ Eskişehir BOTŞ Denizli Isparta Burdur Muğla Bolu nkara nkara EGO Yapracık Konya Seydişehir BLCK SE Bartın Karaman Mersin Samsun Çankırı masya Çorum Tokat Yozgat Sivas Kırşehir Nevşehir ksaray Ereğli KKTC dana Kayseri Ceyhan 16 BCM Ordu dıyaman Kahramanmaraş raban Bozova Dörtyol Gaziantep İskenderun Hatay Russian Fed. (Blue Stream) Giresun Elazığ Malatya Şanlıurfa SYRI Trabzon Rize rtvin Gümüşhane Bayburt Erzincan Erzurum Batman Diyarbakır Mardin zerbaijan GEORGI rdahan Şırnak IRQ Kars RMENI Iğdır Horasan ğrıdoğubayazıt Silopi 6,6 BCM Van EXISTING NTURL GS PIPELINES Turkmenistan 16 BCM 10 BCM İRN Iran MEDITERRNEN SE LEBNON MRMR EREĞLİSİ LNG IMPORT TERMINL PLNNED NTURL GS UNDERGROUND STORGE 2

3 Natural Gas Sale & Purchase Contracts EXISTING CONTRCTS NTURL GS SLE ND PURCHSE CONTRCTS QUNTITY (BCM/YER DTE OF SIGNTURE TERM (YERS) STTUS RUSSIN FED In Operation (1987) RUSSIN FED In Operation (1998) RUSSIN FED In Operation (2003) IRN In Operation (2001) ZERBIJN 6, TURKMENISTN ???? LGERI (LNG) In Operation (1994) NIGERI (LNG) 1, In Operation (1999) TOTL

4 PREVIOUS STRUCTURE Imported Gas BOTŞ Industry Residential Distribution Power BOTŞ was empowered under Decree No. 397 as a monopoly on; Import, Transmission, Sale and determination of sales prices of imported natural gas Domestic Gas 4

5 TURKISH NTURL GS MRKET LW Enactment of the Natural Gas Market Law May 2, 2001 Objectives; To establish the legal framework for natural gas import, export, transmission, wholesale, city distribution, storage, and CNG sale, transmission and distribution To develop a fair, transparent and competitive natural gas market To unbundle market activities and eliminate the monopolistic structure in the market To create a market open to new entrants in all areas To ensure an independent regulatory and supervisory system in the natural gas market 5

6 NEW MRKET STRUCTURE SUPPLY MRKETING CONSUMPTION Import Export Wholesale Eligible Customers Domestic Production Distribution Market Opening November 2, 2002 Non-Eligible Customers 6

7 LICENSING Licenses are required in order to engage in any natural gas market activity, Separate licenses are required for each market activity and each facility, Types of Licenses a) Import License b) Transmission License c) Storage License d) Distribution License e) Wholesale License f) CNG License g) Export License 7

8 Licences Granted as of ugust 2008 Type of License Number of Licenses Import 11 Wholesale 27 Transmission 1 (PIPELINE) 15 (LNG) Distribution 58 CNG 48 Storage 4 Export 1 Total 165 8

9 Implementation of Law in Distribution License Tenders Distribution licenses have being granted through a tender process. Prequalification has being based on financial strength and experience of the companies. Evaluation has being based on the unit service and depreciation charge for supplying one kwh natural gas to consumers. 9

10 Implementation of Law in Distribution Tariffs NTURL GS RETIL PRICE UNIT SERVICE ND DEPRECITION CHRGE GS PROCURMENT PRICE 10

11 Implementation of Law Rights of Municipalities Winner get license from EMR and is authorized for distribution activity at the related region. The distribution company obtaining the distribution license from the EMR, invites the municipality to a partnership at a rate of 10% within the city in which it is authorised without the need to provide any capital. 11

12 Implementation of Law Obligations of Distribution Companies Distribution Companies; Shall begin investment at least in six (6) months, Shall start gas distribution in any region of the city at least in eighteen (18) months, Shall connect all customers across the whole city at least in five (5) years 12

13 E Market M R Opening (Distribution ctivities) February

14 TRIFFS Types of Tariffs; Connection Tariffs Transmission Storage Tariffs Wholesale Tariffs Retail Sale Tariffs However, until sufficient competition is in place, all tariffs shall be determined by EMR. ll determined tariffs are in the form of price ceilings and they are in place at the moment. 14

15 GS RELESE PROGRM ccording to Gas Law; BOTŞ is required to gradually transfer its import contracts to private enterprises through a tendering process. The minimum amount to be transferred each year is 10% of the total contracted amount. BOTŞ is required to transfer its import contracts until its market share decreases to 20% of annual consumption by the year BOTS cannot enter into a new commercial contract until its imports fall to 20% of the national consumption by

16 Conclusion Turkey has already made substantial progress in Natural Gas Market liberalization The reforms foreseen in Natural Gas Market Law are successfully realized by EMR. fter the reforms, confidence is realized at the Turkish gas market fully liberalized market structure will inevitably increase Turkey s role as a bridge for energy trade between sia and Europe 16

17 ENERGY MRKET REGULTORY UTHORITY OF TURKEY 17

NATURAL GAS MARKET TARIFFS REGULATION

NATURAL GAS MARKET TARIFFS REGULATION 1 Presentation Outline NATURAL GAS MARKET TARIFFS Tariff Definition Process and Main Principles Type of Tariffs Connection Tariffs Tariffs Regarding Transmission and