Abstract
Natural gas is a strategic sector for Turkey and its control, which has been mandated by the state for so long, is shifting. Due to the sector’s direct and indirect impacts on economic/social development and growth, the issue of how to restructure the Turkish gas market by reducing, if not fully removing, the dominance of the state monopolist, BOTASṃ, and how to handle the concerns regarding the structural changes being imposed on BOTASṃ such as splitting down its activities into different legal entities remains one of the main interests of the Turkish regulators and the policymakers. Clearly, the participation of private and foreign suppliers in the Turkish gas supply chain poses commercial risks and challenges for BOTASṃ, and a new roadmap for creating stimulated import prices with marked reductions; developing infrastructure for imports, transmission, storage and distribution; and setting appropriate tariffs for the use of different components of gas infrastructure holds crucial importance in the time of the reforms and market developments in Turkey designed to encourage all market players.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
The participants identified as stakeholders taking an active part in the Turkish gas market (namely EMRA, BOTAŞ and private companies).
- 2.
It is left to the discretion of distributors to require switching customers to replace their existing meters with remote reading meters to make instant information flow reachable in real time.
- 3.
Between April 2009 and February 2013, shippers were exposed to pressure-related penalties 198 times and its cost to private sector was TRY111.4 million in total (PETFORM DIVID, 2013).
- 4.
Starting from the national entry points and finishing at the domestic exit points (determined as per Standard Transportation Contracts).
- 5.
In the event that customers’ gas suppliers fail to maintain normal conditions of gas supply, the designated Supplier or the SoLR ensure(s) continuity of gas supply for non-domestic and domestic customers connected to the gas network (Utility Regulator 2012).
- 6.
Based on the High Planning Council Decision No. 2008/T-5 “Procedures and Principles of Cost Based Pricing Mechanism to be Applied by the State Economic Enterprises of Energy” to be effective from 1 July 2008.
- 7.
For example, the Dutch local Groningen sales contracts in return for a substantial capacity charge payable regardless of the gas consumed and UK high-swing contracts from the fields developed for seasonal supply (Melling 2010, 128).
- 8.
It is highlighted by the interviewees that despite the 30-year underground natural gas storage licence issued by EMRA to Bendis Enerji on 2 February 2014 towards the Tarsus UGS project no nail has been pounded to the project as of 2019 and it’s not clear whether the project will be realised.
- 9.
This can be subject to another criticism that BOTAŞ still classifies the customer groups based on their use of gas being more or less than 300,000 m3 although the eligibility levels, as of 2018, are reduced to 75,000 m3.
- 10.
On 24 November 2015, Turkey shot down a Russian warplane in response to violation of its airspace, whereas Russia said the plane was over Syria. See http://www.bbc.co.uk/news/world-middle-east-34912581 [accessed on 9 April 2019].
- 11.
Austria, Belgium, Czech Republic, Denmark, France, Germany, Hungary, Poland and Slovakia.
- 12.
Legal unbundling is yet to be realised at the time of writing.
- 13.
Due to their first mover advantage in the international market.
- 14.
Or, phrased differently, their (zero) marginal cost does not reflect the total cost for the purchase of gas.
- 15.
Distribution system operators are generally responsible for metering their customers’ consumption, and therefore in competitive markets often have a vital role in ensuring the availability of accurate consumption data and in ensuring a smooth customer transfer between suppliers (Energy Sector Inquiry 2007, 234).
- 16.
Which is still a gap in the legislation of Turkey.
References
Accenture. (2013). Türkiye doğalgaz ticareti üssünün/borsasının geliştirilmesi [Developing a Natural Gas Hub/Exchange in Turkey]. Turkey: Accenture.
Boddy, L., & Sabadus, A. (2013, April 26). ICIS Gas Market Pricing. 7th Shippers Forum, Bursa.
Braeutigam, R. (1989). Optimal Policies for Natural Monopolies. In Schmalensee, R., & R. D. Willig (Eds.), Handbook of Industrial Organization (II), 1290–1346.
Cavaliere, A. (2007). The Liberalization of Natural Gas Markets: Regulatory Reform and Competition Failures in Italy. Oxford Institute for Energy Studies NG 82, OIES; Oxford.
Chang, H. J. (1997). Critical Survey: The Economics and Politics of Regulation. Cambridge Journal of Economics, 21(6), 703–728.
Demsetz, H. (1968). Why Regulate Utilities? Journal of Law and Economics, 11(1), 55–65.
Den Hertog, J. (1999). General Theories of Regulation. Utrecht: Economic Institute, CLAV, Utrecht University.
DiLorenzo, T. J. (1996). The Myth of Natural Monopoly. The Review of Austrian Economics, 9(2), 43–58.
Dnes, A. W. (1995). Franchising and Privatization: Public Policy for the Private Sector. Note no. 40. Washington: The World Bank, pp. 5–8.
EC. (2007, January 10). DG Competition Report on Energy Sector Inquiry. Brussels: European Commission.
EU Regulation 713/2009 of 13 July 2009 on Establishing an Agency for the Cooperation of Energy Regulators. OJ L211/1 (“Gas Regulation 713”).
EU Regulation 714/2009 of 13 July 2009 on Conditions for Access to the Network for Cross-Border Exchanges in Electricity and Repealing Regulation (EC) No 1228/2003. OJ L211/15 (“Gas Regulation 714”).
EU Regulation 715/2009 of 13 July 2009 on Conditions for Access to the Natural Gas Transmission Networks and Repealing Regulation (EC) No 1775/2005. OJ L211/36 (“Gas Regulation 715”).
Glaeser, E. L., & Shleifer, A. (2003, June). The Rise of the Regulatory State. Journal of Economic Literature, XLI, 401–425.
Gunton, G. (1888). The Economics and Social Aspects of Trusts. Political Science Quarterly, 3(3), 385–408.
Harstad, R. M., & Crew, M. A. (1999). Franchise Bidding Without Holdups: Utility Regulation with Efficient Pricing and Choice of Provider. Journal of Regulatory Economics, 15, 141–163. Retrieved June 21, 2019, from http://harstad.missouri.edu/papers/FranchiseBidJRE.pdf.
IEA. (2006). China’s Power Sector Reforms: Where to Next? France: OECD/IEA.
Joskow, P. L. (2007). Regulation of Natural Monopolies. In A. M. Polinsky & S. Shavell (Eds.), Handbook of Law and Economics (Chapter 16). North-Holland.
Joskow, P. L. (2008). Lessons Learned from Electricity Sector Liberalisation. Energy Journal, 29(1), 9–42.
Kim, S. R., & Horn, A. (1999). Regulation Policies Concerning Natural Monopolies in Developing and Transition Economies. DESA Discussion Paper No. 8. New York: United Nations.
Klemperer, P. (2001). Collusion and Predation in Auction Markets. Centre for Economic Policy Research, Oxford University. Retrieved May 3, 2019, from http://papers.ssrn.com/sol3/Papers.cfm?abstract_id=260188.
Lohmann, H. (2006). The German Path to Natural Gas Liberalisation: Is It a Special Case? Oxford Institute for Energy Studies NG 14. Oxford: OIES.
Melling, A. J. (2010). Natural Gas Pricing and Its Future Europe as the Battleground. Washington: Carnegie Endowment for International Peace.
Morton, A. (2012). European Public Services Briefings 4: European Union Public Procurement Law, the Public Sector and Public Service Provision. European Services Strategy Unit. Retrieved July 3, 2019, from https://european-services-strategy.org.uk.archived.website/news/2012/european-public-services-briefing-4-european-u/eu-public-procurement.pdf.
NGML. (2001). Natural Gas Market Law No. 4646, Adoption Date: 18/04/2001, Published in the Turkish Official Gazette No. 24390 of 2 May 2001. Retrieved June 20, 2019, from https://www.epdk.org.tr/Detay/Icerik/1-2302/natural-gaslaw-on-natural-gas-market.
Olson, M. (1965). The Logic of Collective Action: Public Goods and the Theory of Groups. Cambridge: Harvard University Press.
Polo, M., & Scarpa, C. (2002). The Liberalization of Energy Markets in Europe and Italy. Paper Prepared for The Conference “Monitoring Italy” Organised by ISAE in Rome, 10.1.2003. Retrieved April 13, 2019, from ftp://ftp.igier.unibocconi.it/homepages/polo/ISAE%20Polo%20Scarpa.pdf.
Porter, M. E. (1980). Competitive Strategy Techniques for Analyzing Industries and Competitors. New York: The Free Press.
Soysal, C., Yücel, C. Ö., Koyuncu, T., & Tokgöz, E. (2012). Doğal gaz sektör araştirmasi [Natural Gas Market Research]. Ankara: Competition Authority.
Utility Regulator. (2012, June). Gas Supplier of Last Resort: Decision Paper. Utility Regulator Electricity Gas Water.
Viscusi, W. K., Harrington, J. E., & Vernon, J. M. (2005). Economics of Regulation and Antitrust. Cambridge: The MIT Press.
Williamson, O. E. (1976). Bidding for Natural Monopolies in General and with Respect to CATV. The Bell Journal of Economics, 7(1), 73–104.
Yardımcı, O. (2012, February 27–March 1). Price Regulation of the Natural Gas Sector in Turkey. ERRA Training Course: Price Regulation & Tariffs, Budapest.
Yardımcı, O. (2015b). Efficiency and Service Quality Analyses of the Natural Gas Distribution Companies: A Case Study of Turkey. In O. Yardımcı & M. B. Karan (Eds.), Energy Technology and Valuation Issues (Chapter 9). Springer.
Legal Resources
Energy Market Regulatory Authority Board Decision No 725.
Energy Market Regulatory Authority Board Decision No 1439/2.
Energy Market Regulatory Authority Board Decision No 4169.
High Planning Council Decision No. 2008/T-5 “Procedures and Principles of Cost Based Pricing Mechanism to be Applied by the State Economic Enterprises of Energy” to be Effective from 01.07.2008.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2020 The Author(s)
About this chapter
Cite this chapter
Demir, O. (2020). Diagnosis of Challenges Affecting the Liberalisation of the Turkish Natural Gas Market. In: Liberalisation of Natural Gas Markets. The Political Economy of the Middle East. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-15-2027-3_6
Download citation
DOI: https://doi.org/10.1007/978-981-15-2027-3_6
Published:
Publisher Name: Palgrave Macmillan, Singapore
Print ISBN: 978-981-15-2026-6
Online ISBN: 978-981-15-2027-3
eBook Packages: Economics and FinanceEconomics and Finance (R0)