Cookies on the ICIS website


Our website uses cookies, which are small text files that are widely used in order to make websites work more effectively. To continue using our website and consent to the use of cookies, click away from this box or click 'Close'

Find out about our cookies and how to change them

Turkish energy firms reiterate autumn gas hike expectations

19 Jun 2014 10:32:00 | esgm


Turkish energy companies expect an 11.20% gas price increase either in September or October this year, which may be followed by another rise of 13.75% in spring next year at the very earliest, according to a monthly survey conducted by ICIS.

The expected increase is also captured by the ICIS power fron- year price which has risen 5.01% in the first six months of assessment.

The latest result of the ICIS gas survey is fractionally lower than in May when companies expected an increase of 12.5% from October. Nevertheless, as a general observation, opinions regarding both the expected gas price increase and the date when this may be enacted have been fairly consistent during both periods.

ICIS calculates the percentage price increase as a straightforward arithmetic average of the values quoted by companies. However, when broken down by respondents, eight out of 15 companies surveyed this month said they expected a 10% rise. In this group, one said he expected a 10% increase for residential consumers and 15% for industrial customers which meant that ICIS took a 12.5% average when calculating the final value.

Another four respondents expected a 15% increase. Other expectations quoted by the remaining three respondents included 7.5%, 8 or 9% and 12 or 14%.

The majority of interviewees agreed that the most likely date for the government to introduce the increase is after the upcoming August elections. Five said the date was likely to be September ‘14, while others suggested that October ‘14 was more plausible.

There were three companies who excluded the possibility of an increase until October 2015, while two others said January ’15 or Summer ’15 would be more likely.

An 11.20% gas price increase would raise the current regulated wholesale price from TL717.78/1000 standard cubic metres (kscm) to TL798.17/kscm (€25.81/MWh). To compare, the ICIS Dutch TTF October price stood at €22.05/MWh at the beginning of this week.

Last month four out of a total of 10 respondents said a 10% hike was likely; three said this could be between 10-15%. Two argued the value would be 15% while one respondent said it should be anywhere between 15 to 20%. Where companies quoted ranges, ICIS took the mid points in consideration and calculated a straightforward arithmetic average.

There was also consistency regarding the possible timing of the hike, with six companies expecting it in October and two in September this year. Two however, said October 2015 was more likely for a first gas price increase.

Reasons behind the increase

All companies interviewed in June agreed that the increase was long overdue. The government, which is responsible for adjusting the wholesale price, has abstained from doing so since 2012. The last increases were enacted between October 2011 and October 2012 and totalled 45.35%. This means that the current regulated price is not reflecting oil and exchange rate fluctuations that have occurred since then.

One source pointed out that recent events in Ukraine and Iraq could also augment the need for an urgent gas price increase.

Firstly, the political turmoil in Iraq has already sent shockwaves to the crude market, where oil futures jumped 4% in the second week of June amid rising political tensions and violence in Iraq. Reduced production in the Middle Eastern country combined with already low production in Libya may continue to boost global oil prices in the coming months.

Secondly, in case of Russian gas supply cuts amid an ongoing dispute with transit country Ukraine, Turkey’s incumbent BOTAS may be forced to explore supply alternatives. These could include costly LNG.

Ultimately, the impact of political turmoil in the Middle East and North Africa and the fall-out of the Moscow-Kiev spat are likely to leave Turkey to shoulder yet another hefty energy bill. The rising costs should logically be reflected in the domestic wholesale price.

The question that emerges is whether the government will listen to the commercial logic or the political logic that dictates a price freeze until Turkey is well over its upcoming presidential elections in August and parliamentary elections in the second quarter of 2015.

Reflection in electricity prices

The expectation of a gas price increase is also felt in electricity prices which typically rise by half the value of any announced gas price mark-up. In this instance, an 11.2% gas price hike may attract a 5.6% increase in the regulated and non-regulated prices, although this is not an exact science.

Nevertheless, according to ICIS calculations, this chimes with prices quoted for the front year. For example, the value of Calendar Year 2015 Baseload has increased from TL161.00/MWh when it was first assessed at the beginning of this year to TL169.50/MWh on 16 June. This represents a 5.01% jump over the last six months. Comparatively, Calendar Year 2014 Baseload was last assessed at TL159.25/MWh on 31 December 2013, according to ICIS data.

Any further increases?

Yes, although most of the 15 respondents refrained from giving an exact figure or quoting a firm date for any subsequent hikes. Two companies out of 15 said they were expecting increases whose arithmetic average was 13.75%. This means that one is braced for a 12.5% rise, while the other for a 15% increase, possibly from September or October 2015. Other companies said they were expecting the government to adjust the price of gas up once more from next spring or even in May 2016, but they refused to specify by how much. Aura Sabadus


While changes in the price of natural gas and electricity are purely the remit of the Turkish government, ICIS has intermittently run monthly surveys since the beginning of 2012. The survey aims to reflect market participants’ expectations for tariff increases, and follows their request for greater transparency in the Turkish electricity and gas markets.

The survey targets a minimum of 10 companies and typically runs on a monthly basis for as long as there is an expectation of an increase in the natural gas tariff. It asks standardised questions and collects data on an anonymous basis.

The average of the tariff increase expected reflects the arithmetic average of all the percentage figures submitted to ICIS each month.

The timing of the anticipated tariff increase reflects the mean of all the percentage figures submitted to ICIS each month.

Anyone interested in taking part in the survey can contact

Other Options