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Liberalization Process and Legal Aspects of the Turkish Natural Gas Market

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Abstract

This chapter aims to study the liberalization process, legal aspects and especially reform plans of Turkish natural gas market with a critical approach. The natural gas market of Turkey is growing consistently. Although Turkey stands next to the important fossil fuel producing countries, its natural gas resources are very limited. Nevertheless, Turkey’s geographical position is a key link between the world’s largest energy resources and the European markets. Therefore the regulation and liberalization of Turkish Natural Gas Market is of not only national but also global importance. Currently, Turkey’s natural gas market is in the early stages of liberalization. First significant steps regarding the liberalization of the market were taken with the Natural Gas Market Law (NGML) of 2001. Since then there has been a slow but gradual progress. The pricing strategy of Turkish governments, unrealistic targets of the NGML and capacity problems of the Turkish private sector are some of the important reasons why the planned liberalization stage could not be reached considerably. The legally unbundling of market activities and a significant decrease in market share of BOTAŞ, which is the state owned and market dominant natural gas company, are exemplifying the failed targets of the NGML. After 13 years of enforcement of the NGML, the law maker plans to reform the NGML in order to ensure the compliance with the EU regulations and to bring dynamism in the liberalization process. However, realistic targets and a change in the pricing policy of the government seem to be necessary in order to achieve a certain stage of market liberalization. It can also be recommended to take more effective measures to ensure a fair access to the natural gas transmission system for all of the market players. At that point the unbundling of market activities is indispensable. The unbundling of market activities can be carried out through different methods such as “a legal separation of transmission activities”, “an independent system operator” and “an independent transmission operator.” On the other hand, establishing and keeping strong energy companies will be necessary for Turkey in order to reach its long declared target of being an international trade hub for natural gas.

Keywords

  • Gas market
  • Liberalization
  • Turkey

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Fig. 8.1

Notes

  1. 1.

    For an analysis of geopolitical position of Turkey regarding natural gas sources, see also Cagaptay and Evans (2013), pp. 25–35.

  2. 2.

    *billion cubic meter

  3. 3.

    *billion cubic meter

  4. 4.

    See also Cagaptay and Evans (2013, p. 8).

  5. 5.

    For detailed information regarding privatization of natural gas sector facilities, see TUSIAD (2009), pp. 30–39.

  6. 6.

    *Turkish Petroleum Corporation.

  7. 7.

    Art 2 of the NGML.

  8. 8.

    Art 1 of the NGML.

  9. 9.

    Number: 2003/55/EC; IEA, Turkey Review, 69. For detailed information, see Aslan (2009).

  10. 10.

    Art 1 of the Natural Gas Market Transmission Network Operation Regulation.

  11. 11.

    Art 2 of the Natural Gas Market Transmission Network Operation Regulation.

  12. 12.

    Also known as BOTAŞ Network Code.

  13. 13.

    For more information, see Ünal (2012), pp. 77–83.

  14. 14.

    For detailed information about the regulatory and legal improvement of natural gas transmission system of Turkey, see Özen (2012), pp. 34–53.

  15. 15.

    The draft regulates that the vertically integrated legal personality of the PPC will be preserved until January 1, 2015. After that date, the PPC will be re-structured as three separate legal entities to perform the transmission activities, the operations of LNG facilities, the storage activities and the other activities. But the given certain date will most probably be changed, because of extension of the enactment period.

  16. 16.

    Art 22 of the Draft.

  17. 17.

    TANAP: Trans Anatolia Gas Pipeline. The TANAP Project intends the transportation of the natural gas to be produced in Shah Deniz 2 field and other fields of Azerbaijan (and other possible neighboring countries) through Turkey to Europe from 2018 onwards.

  18. 18.

    For detailed analyses regarding trade hub strategies of Turkey, see also Bilgin (2011).

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Eminoğlu, C. (2015). Liberalization Process and Legal Aspects of the Turkish Natural Gas Market. In: Dorsman, A., Westerman, W., Simpson, J. (eds) Energy Technology and Valuation Issues. Springer, Cham. https://doi.org/10.1007/978-3-319-13746-9_8

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