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Turkey mulls release of BOTAS natural gas import contracts to private companies

25 Sep 2012 17:30:40 | esgm

The Turkish government is expecting to release natural gas contracts held by pipeline operator BOTAŞ with Russia, Iran and Azerbaijan to the private sector as early as next year, a source close to the ministry of energy told ICIS.

A partial or total release of BOTAŞ's contracts with the three countries for the import of an estimated 37 billion cubic metres per year (Gm³/year) of piped gas could dramatically reduce the state company's monopoly on the market and pave the way for the liberalisation of the Turkish gas sector.

"Our understanding is that the ministry of energy is seriously considering the release of the other [Iranian and Azeri] contracts next year," the source said.

Turkish energy minister Taner Yildiz hinted in the local press on Tuesday that another 4Gm³/year could be transferred to private companies after this year's transfer of 6Gm³/year.

ICIS understands that the 4Gm³/year will be the remaining volumes that BOTAŞ retained on the Western Line, also known as the Balkan corridor, after an initial transfer of 4Gm³/year in 2005.

BOTAŞ has been importing a total of 14Gm³/year on the Western Line which links Russia to Turkey via Ukraine and Bulgaria.

The first contract signed with Russia in 1986 for the import of 6Gm³/year over a period of 25 years expired last year and BOTAŞ decided not to renew it. As a result 4 companies negotiated the volumes directly with Russia's Gazprom. The four companies - Akfel, Bosphorus Gaz, Bati Hatti and Kibar Holding are expecting to obtain their importing licences in October (see ESGM 13 August 2012).

The second contract, also signed with Gazprom, for the import of 8Gm³/year for a period of 23 years starting from 1998, was partially released to the private sector in 2005. Four companies - EnercoEnerji, Bosphorus Gaz, Avrasya Gaz and Shell Enerji - import 4Gm³/year among them.

Now, the remaining 4Gm³/year could be transferred to more private companies, effectively bringing the share of the private sector in the gas market to 30%.

According to Turkey's Natural Gas Law passed in 2001, BOTAŞ is required to reduce its market share to 20% either through contract or volume transfers.

The latest announcement related to a possible release of all contracts highlights the Turkish government's commitment to enact structural changes and move towards a liberalised gas market. AS

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