Natural Gas Storage Facilities and Exemption System

The cross-border energy projects and domestic supply security may face certain risks.

The liberalization of Turkey’s natural gas market has long been a topic of heated discussion. Turkey has adapted material EU regulations for a competitive and liberal natural gas market. The third party access rule and transparency principles are the backbone of a liberal market since the dominant market players’ market power is balanced by such regulations. Third party access rules and transparency rules allow new market entrants to access the information on the pricing conditions of infrastructure facilities and to benefit from those facilities under the same conditions as the facility owner. 

Nevertheless, market data shows that the cross- border energy projects and domestic supply security may face certain risks due to the lack of sufficient infrastructure and storage capacity. Natural gas storage capacity in Turkey is far below the EU average. Increasing domestic gas demand and new cross-border projects that are imminently pending, should give notice that upcoming new regulatory measures may be enacted in an attempt to resolve the infrastructure and storage inadequacy problems. With respect to the foregoing, Turkey should keep itself as a secure transit country. Due to the impediments to new investments in infrastructure and storage facilities, Turkey may prefer to adopt an “exemption” rule in order to encourage new investments. 

The third party access rule requires that facility operators grant nondiscriminatory access to third parties in return for a regulated earning. This rule aims to prevent the vertically integrated natural gas market players –those who are active at both the supply and retail level- from blocking the entrance of third parties into the market. New market players are predominantly dependent upon the infrastructure facilities of those vertically integrated companies to store or regasify their natural gas/LNG. When third parties are allowed to benefit from facilities under the same conditions as the facility owners, the market barriers for new market players are significantly removed. Moreover, the third party access rule aims to ensure the most efficient use of the existing infrastructure, with the goal being to bring down the unutilized capacity problem to a minimum for existing facilities.