Turkey may further cut gas supply as storage levels drop

Aura Sabadus

21-Jan-2022

LONDON (ICIS)–Turkish energy companies are braced for further curtailment orders for electricity and natural gas consumers as demand remains at some of the highest levels ever seen and Iranian pipeline deliveries are suspended.

A source said gas and electricity transmission system operators BOTAS and TEIAS may be forced to ask medium-sized commercial consumers to reduce consumption of natural gas after all large industrial clients were notified they would receive only 60% of their contracted January gas.

The latest curtailment order to industrial clients pushed up electricity prices to a record Turkish lira (TL) 1,345.00/MWh for Saturday.

It helped to slash gas demand by 10mcm/day on Wednesday after it reached a record 288mcm/day the previous day, but traders told ICIS BOTAS would need to take more drastic action because of fast-depleting line pack and gas storage levels.

Line pack, namely the level of gas that can be stored in the pipeline as opposed to dedicated storage facilities, has been dropping fast, hovering around 366mcm/day on Wednesday compared to 432mcm/day five days before.

Storage levels were also falling, with natural gas held in the Turkey’s two storage facilities hovering around 1.2bcm. Storage levels were close to 1.5bcm at the end of December.

The trader said there may be only 10-12 days’ worth of gas left at the smaller Tuz Golu storage site, if withdrawal levels continue at current rates.

The trader said many industrial companies which rely on natural gas for production may not be able to comply with the curtailment order and would face hefty penalties.

He said some dual-fuel power plants may be asked to switch to fuel oil.

Turkey is facing a difficult period because the cold snap is expected to drag on, with temperatures set to remain some 2°C below the seasonal average.

Meanwhile, pipeline supplies from Iran have been cut for 10 days. BOTAS said the cut was linked to technical difficulties but some traders said Iran itself was facing a period of cold weather and was struggling to supply natural gas to the high-consumption northern areas.

Most of its gas reserves are in the south of the country and Iranian consumers have been historically relying on Turkmen imports during periods of peak winter demand.

On the other hand, Turkish hydro generation has been significantly reduced in recent months because the country has experienced one of its driest year in a decade in 2021.

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