GGP: Turkey’s gas demand decline: reasons and consequences
The statements, opinions and data contained in the content published in Global Gas Perspectives are solely those of the individual authors and contributors and not of the publisher and the editor(s) of Natural Gas World.
This is an excerpt from a paper by the Oxford Institute for Energy Studies published in April 2017.
In 2001, Turkey introduced its Natural Gas Market Law 4646 with the objective of instituting an ambitious program for change, targeting not only liberalization of the gas market, but also the creation of a financially sound, competitive and transparent market, involving both private and public market players bringing more gas to the market at a competitive price. Although progress since then has been quite slow, nevertheless the Law has contributed to dynamic natural gas market development and rapid demand growth. Turkey’s natural gas consumption rose rapidly during the 2000s and by 2014, the highest gas consumption year, had more than tripled to 48.7 bcm/year1compared to a level of 15 bcm in 2000.
An OIES paper on the Turkish domestic natural gas market published in 2014 forecast that gas demand in Turkey would grow modestly but steadily and might reach 67–70 bcm/year by 2030. This assumption was in contradiction to the BOTAŞ forecast performed in 2012 that projected demand growth to almost double by 2030, reaching 81 bcm/year from the 2012 level of 45 bcm/year. With this rapid growth projection by BOTAŞ as well as the OECD’s Economic Outlook that foresaw Turkey as having the fastest-growing demand among OECD countries, the Turkish government faced several increasingly important tasks: to ensure Turkey’s energy security, meet demand in the long term, and ensure that no periodic supply shortages occurred in the next two decades. Shortages might also occur during the 2020s as BOTAŞ’s long-term contracts with all its suppliers of pipeline gas are due to expire (Azerbaijan in 2021, Iran in 2026 and Russia in 2025), as are private companies’ contracts with Gazprom, in 2021, affecting around 36 bcm/year of gas. Any possible shortage of gas in the country could not only put energy security at risk, but also affect the internal political situation. With this concern in mind, the government of Turkey initiated a policy of reducing the share of imported gas and increasing the share of domestically produced energy resources (mainly hydropower, coal, lignite, wind and solar energy) in the energy mix, particularly in the power generation sector.
The statements, opinions and data contained in the content published in Global Gas Perspectives are solely those of the individual authors and contributors and not of the publisher and the editor(s) of Natural Gas World.