TURKISH NATURAL GAS MARKET

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1 TURKISH NATURAL GAS MARKET REPORT 2017

2 All the information, tables and figures provided in this report are reserved and cannot be used without reference. REPUBLIC OF TURKEY ENERGY MARKET REGULATORY AUTHORITY Strategy Development Department ANKARA, 2018 Important Notice: es may revise their own data submitted before, through correction requests. Therefore, there may be some nonconformity between previous reports and present report published. In this report Turkish punctuations rules are adopted for numbers. This report is published within the scope of Official Statistics Programme.

3 PRESIDENT S MESSAGE As Energy Market Regulatory Authority, in the line with the objective of establishing a stable, transparent and competitive energy market, we have been plugging away to fulfill regulation duty given to our institution, taking into account consumer rights, requirements of the companies and the fact that natural gas is one of the most important primary energy resources in our growing economy. As of the end of 2017, our national transmission and distribution networks provided natural gas to households in 78 provinces and 426 districts. In a very short period of time we plan to achieve the goal of providing natural gas supply through distribution network to all of our 81 provinces. In the present case, the regulations required for the utilization of natural gas as LNG and in cities that cannot reach to natural gas with pipeline network realized in In this context, our 34 districts could take advantage of natural gas with the procedures and principles of natural gas distribution network (both LNG and/or ). We are carrying out our legislative preparations at the fastest pace in order to make our country a regional natural gas trading hub. In accordance with this purpose, technical improvements about the capacity of the substructure is going on. Also, the legal infrastructure about the new Organized Trading Platform of Natural Gas by which the prices will be determined in the liberal market conditions has been accomplished in Tuz Gölü Underground Storage Facility came into operation and storage license (LNG/ FSRU) was given to BOTAŞ for Hatay Dörtyol Facility in order to improve the storage capacity in On the other hand, 69 distribution companies operating in the natural gas distribution sector had employed more than ten thousand people, and the total investment made by the sector had exceeded 15 billion TL by the end of We are decisive to take the necessary steps required for the consumers and the investors as the watchdog of the natural gas market. At this point, we regard the views of all market players as the key of taking the right decisions. For this reason, we will not give up listening to their voices as long as we take the pulse of our investors and our consumers. As the Chairman of the EMRA, I wish that the 2017 Natural Gas Market Report, which is the result of our intensive work, will be useful for all stakeholders of the natural gas sector. Mustafa YILMAZ President

4 Executive Summary Production In 2017, 354,15 million Sm 3 of natural gas was offered for sale by 10 producer companies that have wholesale license. The amount of domestic production decreased by 3,58 % compared to Import In 2017, ,95 million Sm 3 of natural gas was imported. Natural gas imports decreased by 19,20 % compared to the In 2017, the majority of imports with a share of 51,93 % was done from Russia. In 2017, ,28 million Sm 3 of LNG (both long-term contracts and spot) was imported, which is 19,48 % of the total imports. While 37,79 % of the total LNG imports was supplied form spot markets, the rest came from the long-term contracts of BOTAŞ with Algeria and Nigeria. Export In 2017, only BOTAŞ was active among licensed 8 export companies and 630,67 million Sm 3 of natural gas was exported by BOTAŞ to Greece. The amount of exported natural gas decreased by 6,52 % compared to Storage d actual underground storage capacity was 3,191 billion m 3, and licensed actual LNG storage capacity was m 3 LNG. With comparing to 2016, actual underground storage increased by 19,9% and actual LNG storage capacity increased by 76,3%. Consumption With the Board Decision No dated 26/01/2017, the national natural gas consumption was estimated as Sm 3 for gas year However, it was realized as ,39 Sm 3 with a deviation of 15,87 %. In 2017, 648,01 million Sm 3 of LNG went directly to consumers without using the national transmission network. The share of this amount in total national natural gas consumption was 1,20 %. Natural Gas By the end of 2017, the total investments (excluding operating expenses and VAT) realized by the distribution companies had reached to million TL increased by 15,24% compared by previous year. The length of the constructed steel line was increased by 11,37% which reached to km, and the length of polyethylene pipelines (excluding service line length) was increased by 9,24% which reached to km. As of the end of 2017, the total number of the subscribers of natural gas distribution companies was increased by 9,96% which reached to , and the number of eligible consumers was increased by 10,48% which reached to i

5 As of the end of 2017, the total consumption of the subscribers of natural gas distribution companies was ,67 million Sm 3 which was increased by 15,19%, and the consumption of eligible consumers was 8.191,16 million Sm 3 which was increased by 13,63%. The Distrubition of the Number of the s in Natural Gas Market Made within the Types of s by the end of 2016 and 2017 Lisans Type Number of Number of Active Number of Number of Active Import (Long Term) Import (SPOT LNG) Transmission (Pipe Line) Transmission (LNG) Storage (LNG) Storage (Underground) (Production) (Transmission-Distrubition) (Sale) (Oto ) Export Distrubition Total Overview of the Natural Gas Market by the end of the December, 2017 (Million Sm 3 ) TOTAL TOTAL Domestic DEMAND SUPPLY Production Import Sales Export (YDomestic (Production (Consumption) Sales + + Import) Export) 354, , ,14 630, , ,81 ii

6 NATURAL GAS MARKET OVERVIEW IN 2017 Amount of Natural Gas Offered for Sale by Production Companies Holding by Provinces of Production Fields (Million Sm 3 ) Provinces Amount TEKİRDAĞ 180,042 İSTANBUL 83,992 KIRKLARELİ 52,517 DÜZCE 22,527 ADANA 12,993 ÇANAKKALE 1,478 ADIYAMAN 0,598 Total 354,146 Amount of Imported Natural Gas by Countries of Origin (Million Sm 3 ) Year SPOT Russia Iran Azerbaijan Algeria Nigeria LNG Total Share (%) 51,93 16,74 11,85 8,36 3,76 7, Amount of Exported Natural Gas (Million Sm 3 ) Exporting Companies Country Amounts BOTAŞ Greece 630,67 Amount of Natural Gas Year-End Stocks by Year (Million Sm 3 ) Years Amounts , ,37 Amount of Consumed Natural Gas by s (Million Sm 3 ) s Conversion , ,52 Industry 1.756, ,51 Household 456,05 529,42 Service , ,13 Transportation 3.123, ,76 Energy , ,94 Other s 106,99 121,86 Total Consumption , ,14 iii

7 TABLE OF CONTENTS NATURAL GAS MARKET OF TURKEY PRODUCTION Province Based Production Amounts Production on the basis of Companies INTERNATIONAL NATURAL GAS TRADE Import Import by Pipelines Liquefied Natural Gas (LNG) and Spot LNG Import Natural Gas Import Data Production-Import Evaluation Export Storage Underground Gas Storage LNG Storage Organized by Pipelines of LNG Natural Gas Trade between es Operating in Natural Gas Market Compressed Natural Gas () Transmission Transmission via Pipelines LNG Transmission Tenders Network Investment Performance Subscriber and Connection Information Interruption of Natural Gas Service (Temporary Gas Cuts) Applications and Complaints Invoice Objections Emergency Actions Employment iv

8 8. Consumption al Consumption Consumption by Provinces Natural Gas Sales of d Companies to Final Consumers Tariff and Pricing Turkey DETAILED DISTRIBUTION OF NATURAL GAS SALES IN ALL PROVINCES BY SECTORS AND COMPANIES IN 2017 (Sm 3 ) v

9 LIST OF TABLES Table 1.1: Production of Natural Gas between (Million Sm 3 )... 2 Table 1.3: Production Amounts and Shares of Producer Companies Holding (Million Sm 3 )... 5 Table 2.1: Amount of Imported Natural Gas by Source Country between (Million Sm 3 )... 8 Table 2.2: Import Quantities of Natural Gas Imported by Companies (Million Sm 3 ) and Shares (%) Between Table 2.3: Import Amounts by the Companies in 2017 (Million Sm 3 ) Table 2.4: Comparison of Imported Natural Gas Entering Point of the System in 2017 (Million Sm 3 ) Table 2.5: Monthly Comparison of Imported Natural Gas between (Million Sm 3 ) Table 2.6: Monthly Data of Long Term Import and Spot LNG Import in 2017 (Million Sm 3 ) Table 2.7: Long Term LNG Import between (Million Sm 3 ) Table 2.8: Spot LNG Import by Countries in 2017 (Million Sm 3 ) Table 2.9: Share of Spot LNG Importers between (%) Table 2.10: Exported Natural Gas Amounts between (Million Sm 3 ) Table 2.11: Monthly of Natural Gas Export Amounts by Years (Million Sm 3 ) Table 3.1: Month End Natural Gas Stock Amounts by Years (Million Sm 3 ) Table 3.2: Delivered Natural Gas Amounts from LNG Terminals in 2017 (Million Sm 3 ) Table 4.1: Amounts of s as Pipeline Gas According to Types (Million Sm 3 ) Table 4.2: Amounts of LNG Sales According to Types (Million Sm 3 ) Table 4.3: Amount of Gas Traded between Companies Operating in Natural Gas Market in 2017 (Million Sm 3 ) Table 4.4: Amount and Share of 10 Companies which Supply the Largest Amounts to Companies Operating in Natural Gas Market (Million Sm 3 ) Table 4.5: Amount of Gas Purchases by d Companies Operating in Natural Gas Market from Other d Companies in 2017 (Million Sm 3 ) Table 4.6: Amount and Share of 10 Companies which Purchased the Largest Amounts from Companies Operating in Natural Gas Market (Million Sm 3 ) Table 5.1: Sale Amounts to Final Consumers between (Million Sm 3 ) Table 6.1: The highest Daily Withdrawal (Peak Demand) from Natural Gas Transmission Network by Month (Million Sm 3 ) Table 6.2: Amount of the Internal Usage Gas in 2017 by Months (Million Sm 3 ) Table 6.3: The amount of National Transmission Network s Stock by Month (Million Sm 3 ) Table 6.2: Monthly Transmitted LNG Amount by Years (Million Sm 3 ) Table 6.5: Monthly Transmitted LNG Amount by Companies (Million Sm 3 ) Table 7.1: Total Investments, Lengths of Steel and Polyethylene Pipelines in Regions Constructed by Companies Table 7.2: Length of Service Lines and Number of Service Lines in Regions Constructed by Companies Table 7.3: Number of Subscribers by Provinces by the End of Table 7.4: Consumption of Subscribers and Eligible Consumers by Companies by the End of 2017 (Million Sm 3 ) Table 7.5: Proportional of Application and Complaint Reasons Made by Consumers to Companies Table 7.6: Companies Employment Data by the End of vi

10 Table 8.1: Total Natural Gas Consumptions by Years (Million Sm 3 ) Table 8.2: Comparison of al Natural Gas Consumption of 2016 and 2017(Million Sm 3 ) Table 8.3: of National Natural Gas Consumption by Provinces in 2017 (Sm 3 ) Table 8.4: Amounts and Shares of Sale to Final Consumers by Importer Companies in 2017 (Million Sm 3 ) Table 8.5: Amount and Shares of Sales to Final Consumers by Companies in 2017 (Million Sm 3 ) Table 8.6: Amounts and Shares of Sales to Final Consumers by Companies in 2017 (Million Sm 3 ) Table 8.7: Amounts and Shares of Sales to Final Consumers by Companies in 2017 (Million Sm 3 ) Table 8.8: Amounts and Shares of Sales to Final Consumers by Top 10 Companies Selling Natural Gas in 2017 (Million Sm 3 ) Table 8.9: Amounts and Shares of Transportation to Eligible Consumers by Companies in Their Region in 2017 (Million Sm 3 ) Table 9.1: Average Unit Prices of Natural Gas Sold by and Supplier Companies to Household and Industrial Consumers in 2017 (TL / Sm 3 ) Table 10.1 ADANA Table 10.2 ADIYAMAN Table 10.3 AFYONKARAHİSAR Table 10.4 AĞRI Table 10.5 AKSARAY Table 10.6 AMASYA Table 10.7 ANKARA Table 10.8 ANTALYA Table 10.9 ARDAHAN Table ARTVİN Table AYDIN Table BALIKESİR Table BARTIN Table BATMAN Table BAYBURT Table BİLECİK Table BİNGÖL Table BİTLİS Table BOLU Table BURDUR Table BURSA Table ÇANAKKALE Table ÇANKIRI Table ÇORUM Table DENİZLİ Table DİYARBAKIR Table DÜZCE Table EDİRNE Table ELAZIĞ vii

11 Table ERZİNCAN Table ERZURUM Table ESKİŞEHİR Table GAZİANTEP Table GİRESUN Table GÜMÜŞHANE Table HAKKARİ Table HATAY Table IĞDIR Table ISPARTA Table İSTANBUL Table İZMİR Table KAHRAMANMARAŞ Table KARABÜK Table KARAMAN Table KARS Table KASTAMONU Table KAYSERİ Table KIRIKKALE Table KIRKLARELİ Table KIRŞEHİR Table KİLİS Table KOCAELİ Table KONYA Table KÜTAHYA Table MALATYA Table MANİSA Table MARDİN Table MERSİN Table MUĞLA Table MUŞ Table NEVŞEHİR Table NİĞDE Table ORDU Table OSMANİYE Table RİZE Table SAKARYA Table SAMSUN Table SİİRT Table SİNOP Table SİVAS Table ŞANLIURFA Table ŞIRNAK Table TEKİRDAĞ Table TOKAT viii

12 Table TRABZON Table TUNCELİ Table UŞAK Table VAN Table YALOVA Table YOZGAT Table ZONGULDAK Table OTHER* Table TÜRKİYE ix

13 LIST OF GRAPHS Graph 1.1: Production of Natural Gas between (Million Sm 3 )... 2 Graph 1.2: Monthly Comparison of Natural Gas Production between (Million Sm 3 )... 3 Graph 1.4: Share of Producer Companies Holding by Amount of Natural Gas Production in 2017 (%)... 5 Graph 1.5: Shares of d Production Companies in 2017 (%)... 6 Graph 1.6: Consumer Shares which are Sold by d Production Companies in 2017 (%). 6 Graph 2.1: Share of Imported Natural Gas by Source Country in 2017 (%)... 9 Graph 2.2: Changes in the Share of Source Countries for Natural Gas Import between Graph 2.3: Share of Companies in Natural Gas Import in Graph 2.5: Share of Pipeline Gas and LNG in Total Import in 2017 (%) Graph 2.6: Share of Natural Gas Imported by Long Term Import and Spot LNG in 2017 (%) Graph 2.7: Amount of Imported Natural Gas by Long Term d Companies by Source Countries in 2017 (%) Graph 2.8: Monthly Comparison of Long Term Import and Spot LNG Import in 2017 (Million Sm 3 ) Graph 2.9: Long Term LNG Import Amounts by Source Countries between (Million Sm 3 ) Graph 2.10: Change in Spot LNG Import Amount between (Million Sm 3 ) Graph 2.11: Spot LNG Import by Countries in 2017 (%) Graph 2.13: Share of Total Natural Gas Supply by Origin in 2017(%) Graph 2.14: Annual Natural Gas Export Amounts (Million Sm 3 ) Graph 2.15: Monthly Comparison of Natural Gas Exported between (Million Sm 3 ) Graph 3.1: Month End Natural Gas Stock Amounts by Years (Million Sm 3 ) Graph 3.2: Comparison of Monthly Import/Consumption/Stock Amounts in 2017 (Million Sm 3 ) Graph 4.1: Share of Import and Production Companies in Natural Gas Supply in 2017 (%) Graph 4.2: Proportional of Pipeline s to d Companies According to Types (%) Graph 5.1: Sale Shares of Supplier Companies to (Sale) d Companies According to Their Type (%) Graph 5.2: Share of Sales to Final Consumer by Types in 2017 (%) Graph 6.1: Monthly of Total Natural Gas Amounts Entered into Transmission Network and Withdrawn from Transmission Network (Million Sm 3 ) Graph 6.2: The Highest Daily Withdrawal (Peak Demand) from Natural Gas Transmission Network by Month in 2017 (Million Sm 3 ) Graph 6.3: Monthly of Virtual Trade Volumes in 2017 (Million Sm 3 ) Graph 6.4: Monthly of Imbalance Amount in 2017 (Million Sm 3 ) Graph 6.5: Monthly of End-of-Day Trade in 2017 (Million Sm 3 ) Graph 6.6: Monthly Transmitted LNG Amount by Years (Million Sm 3 ) Graph 7.1: Share of Subscribers and Eligible Consumers by the End of 2017 (%) Graph 7.2: Monthly Consumptions of Natural Gas Subscribers in 2017 (Million Sm 3 ) Graph 7.3: of Number of 2017 Household Subscribers by Natural Gas Usage Type (%) Graph 7.4: Reasons for Temporary Gas Cuts in 2017 (%) Graph 7.5: Proportional of Application and Complaint Reasons Made by Consumers to Companies (%) Graph 7.6: Status of Invoice Objections in 2017 (%) x

14 Graph 8.1: Share of al Consumption in 2017 (%) Graph 8.2: Annual Comparison of al Consumption Graph 8.4: Monthly Changes of al Consumption in 2017 (Million Sm 3 ) Graph 8.5: Amount of Natural Gas Sold and Transported by Companies in 2017 (Million Sm 3 ) Graph 9.1: Breakdown of Natural Gas Price Sold to Household and Industrial Consumers by and Supplies Company in xi

15 NATURAL GAS MARKET OF TURKEY According to Natural Gas Market Law No which forms the legal framework of Turkey s natural gas market, import, distribution, storage, wholesale, export, transmission, compressed natural gas () distribution and transmission are defined as market activities for which obtaining a license is compulsory. Data and graphs about all market activities which are defined in the Law are depicted in this part by subtitles. 1. PRODUCTION Natural gas exploration and production (E&P) activities are performed within the framework of Turkish Petroleum Law No and E&P and operation licenses as given by the General Directorate of Petroleum Affairs. Although production is not regarded as a market activity in the Law, production companies can sell the natural gas that they produced to wholesale companies, import companies, export companies, distribution companies, selling companies at well head, transmission and distribution companies and eligible consumers provided that they obtain wholesale license from the Authority. Moreover, production companies can export the natural gas they produced provided that they obtain export license. In this context; In 2017, natural gas, produced at South Eastern Anatolia, Thrace and West Black Sea regions, was sold to industrial and commercial entities near production regions, distribution companies, import companies, wholesale companies, and companies at well head by companies who obtained wholesale license from the Authority. These companies are listed below: Türkiye Petrolleri Anonim Ortaklığı (TPAO) Transatlantic Exploration Mediterranean International Pty.Ltd. Türkiye Ankara Şubesi (TEMI) Park Place Energy Limited-Türkiye Ankara Şubesi (PARK PLACE LİMİTED) Thrace Basin Natural Gas (Türkiye) Corporation Türkiye-Ankara Şubesi (THRACE BASIN) Petrogas Petrol Gaz ve Petrokimya Ürünleri İnşaat San. ve Tic. A.Ş. (PETROGAS) Park Place Petrol Arama ve Üretim A.Ş.(PARK PLACE) Foinavon Energy, Inc. Türkiye-Ankara Şubesi (FOINAVON) 1

16 Amity Oil International Pty. Limited Merkezi Avustralya Türkiye Ankara Şubesi (AMITY) Corporate Resources B.V. Limited Şirketi-Ankara-Türkiye Şubesi(CORPORATE RESOURCES) Marsa Turkey B.V. Türkiye Ankara Şubesi (MARSA) Yearly natural gas output of producer companies holding wholesale license are given at Table 1.1. Table 1.1: Production of Natural Gas between (Million Sm 3 ) Years Amounts Graph 1.1: Production of Natural Gas between (Million Sm 3 ) 2

17 In 2017, the outputs of production companies holding wholesale license decreased by 3,54 % compared to As seen in Graph 1.2, in 2017, the monthly production patterns was almost stable. 50,00 45,00 40,00 35,00 30,00 25,00 20,00 15,00 10,00 5,00 0, Graph 1.2: Monthly Comparison of Natural Gas Production between (Million Sm 3 ) 1.1. Province Based Production Amounts In 2017, first natural gas production started in Çanakkale. In this province, the production amount was 1,48 million Sm3 on December. This amount enteres to the national transmission network at the Marsa entry point. When production in provinces compared, it is seen that, with 50,84 % share, the largest production took place in Tekirdağ. Then, Istanbul with 23,72 % share and Kırklareli with 14,83 % share followed. In Edirne, production was only 598 Sm3 in 2017 which realizedin only December. Production amounts according to provinces and months are given at Table 1.2. Table 1.2: Monthly Natural Gas Production by Provinces in 2017 (Million Sm 3 ) 3

18 Province/Months January February March April May June July August September October November December Total TEKİRDAĞ 16,68 15,13 16,97 15,50 15,13 13,42 14,73 14,39 13,18 14,71 14,98 15,21 180,04 İSTANBUL 7,80 6,58 6,69 6,79 7,03 6,74 7,05 7,06 6,91 7,20 6,85 7,27 83,99 KIRKLARELİ 4,88 3,96 4,37 4,44 4,61 4,42 4,19 4,72 4,75 4,52 3,81 3,86 52,52 DÜZCE 2,43 2,16 2,12 3,06 2,35 1,40 1,81 1,84 1,64 1,36 1,23 1,15 22,53 ADANA 0,91 0,78 1,63 1,39 1,11 0,98 1,12 1,11 0,92 1,28 1,09 0,69 12,99 ÇANAKKALE 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 1,48 1,48 ADIYAMAN 0,05 0,04 0,06 0,06 0,06 0,05 0,04 0,05 0,04 0,05 0,05 0,05 0,60 EDİRNE 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 Total 32,75 28,64 31,84 31,25 30,28 27,01 28,94 29,17 27,45 29,11 28,02 29,70 354,15 TEKİRDAĞ 50,84% DÜZCE 6,36% İSTANBUL 23,72% ÇANAKKALE 0,42% EDİRNE 0,00% ADANA 3,67% ADIYAMAN 0,17% KIRKLARELİ 14,83% Graph 1.3: Share of Natural Gas Production in 2017 by Provinces (%) 1.2. Production on the basis of Companies 354,15 million Sm3 of natural gas was produced in 2017 and the majority of this production was done by TPAO and Thrace Basin Natural Gas Corporation. Production amounts and shares of production companies holding wholesale license are given at Table 1.3 and in Graph

19 Table 1.3: Production Amounts and Shares of Producer Companies Holding (Million Sm 3 ) Company/Months January February March April May June July August September October November December Total TPAO 24,44 20,84 23,17 23,42 22,26 20,04 20,95 21,00 19,76 20,58 19,94 21,10 257,49 THRACE BASIN 5,05 4,85 5,91 5,05 5,57 5,11 5,90 6,31 5,99 6,82 6,26 5,59 68,40 AMITY OIL 0,65 0,75 0,80 0,72 0,73 0,65 0,60 0,60 0,62 0,68 0,74 0,72 8,28 CORPORATE RESOURCES 1,41 1,14 0,90 0,54 0,55 0,51 0,58 0,35 0,26 0,35 0,46 0,24 7,28 PARK PLACE 0,65 0,58 0,57 0,82 0,63 0,37 0,48 0,49 0,44 0,36 0,33 0,31 6,03 FOİNAVON ENERGY 0,30 0,26 0,26 0,38 0,29 0,17 0,22 0,23 0,20 0,17 0,15 0,14 2,76 PARK PLACE LİMİTED 0,24 0,22 0,21 0,31 0,23 0,14 0,18 0,18 0,16 0,14 0,12 0,11 2,25 MARSA TURKEY 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 1,48 1,48 PETROGAS 0,02 0,01 0,02 0,02 0,02 0,01 0,01 0,01 0,01 0,01 0,01 0,02 0,17 TRANSATLANTIC EXPLORATION 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 Total 32,75 28,64 31,84 31,25 30,28 27,01 28,94 29,17 27,45 29,11 28,02 29,70 354,15 December November October September August July June May April March February TPAO THRACE BASIN AMITY OIL CORPORATE RESOURCES PARK PLACE FOINAVON ENERGY PARK PLACE LTD MARSA TURKEY January 0% 20% 40% 60% 80% 100% Graph 1.4: Share of Producer Companies Holding by Amount of Natural Gas Production in 2017 (%) 5

20 AMITY OIL 2,34% THRACE BASIN 19,31% CORPORATE RESOURCES 2,06% FOINAVON ENERGY 0,78% PARK PLACE 1,70% PARK PLACE LTD 0,64% PETROGAS 0,05% MARSA TURKEY 0,42% TRANSATLANTIC EXPLORATION 0,00% TPAO 72,71% Graph 1.5: Shares of d Production Companies in 2017 (%) These companies sold 59,68 % of natural gas they produced to final consumers by direct lines. Consumer shares which were sold by wholesale licensed production companies are seen at Graph ,31% Import 18,84% Final Consumer 59,68% 15,17% Graph 1.6: Consumer Shares which are Sold by d Production Companies in 2017 (%) 6

21 2. INTERNATIONAL NATURAL GAS TRADE 2.1 Import Usage of natural gas started in 1970s and its utilization rate and area have increased in parallel with the rise of energy demand and advantages of natural gas. Import became compulsory because of limited reserves and domestic production amounts in comparison with existing and potential demand Import by Pipelines The first purchase agreement was signed with Russia in 1986 which proposed 6 billion m 3 (plateau) annual import, to meet increasing consumption. Enlargement of natural gas purchases has continued as part of other agreements signed with Russia (Additional West Line and Blue Stream Line), Iran and Azerbaijan. Thereby, in the current situation, Turkey imports natural gas from 3 different countries via pipeline as part of long term purchase agreements Liquefied Natural Gas (LNG) and Spot LNG Import When transmission of natural gas is impossible or infeasible with pipeline in terms of technical and economic reasons, natural gas could be traded in the form of LNG. By this way, gas is liquefied by cooling to -162 C as its volume is reduced 600 times and LNG is transferred by specifically manufactured tankers. To increase security and flexibility of supply, by BOTAŞ, LNG import from Algeria started in 1994 as part of the purchase agreement signed in 1988, import from Nigeria started in 1999 as part of the purchase agreement signed in 1994 for diversifying supply sources. Decreasing amount of natural gas from West Line after the natural gas crisis between Russia and Ukraine in 2006, Iran s cuts of natural gas in wintertime because of technical problems and the fact that Iran could not meet her domestic consumption and not having enough storage capacity caused a supply problem about the natural gas coming from pipelines. Because of these reasons, especially in winter months, less daily supplies projected by the agreements realized and thus some problems occurred about ensuring supply-demand balance. On the other hand, with Electricity Market Law and Law Related to Making Amendments on Some Laws dated 09/07/2008 and numbered 5784, spot LNG import was set free for BOTAŞ and other market players and thus spot LNG import activity took place in the regulations. Also, with only one spot LNG import license, companies became able to import LNG from more than one country. There exist 4 LNG terminals in operation for storage, gasification and withdrawal of LNG came from Algeria and Nigeria with long term contract and spot market. One of them is Marmara Ereğlisi LNG Terminal which came into operation in 1994 by BOTAŞ and the other one is Ege Gaz A.Ş. LNG Terminal which was constructed in 2001 in Aliağa and came into operation in The other one is a Floating Storage and Regasification Unit (FSRU), owned by Etki Liman İşletmeleri Doğal Gaz İthalat ve Ticaret A.Ş., which is the first FSRU terminal of Turkey, came into operation by the end of And the last one is Hatay Dörtyol LNG (FSRU) which was licensed in

22 2.1.3 Natural Gas Import Data Import amounts realized between 2008 and 2017 are given at Table 2.1 on the basis of source country. Table 2.1: Amount of Imported Natural Gas by Source Country between (Million Sm 3 ) Countries Russia Iran Azerbaijan Algeria Nigeria Others* Total Years Amount Share (%) Amount Share (%) Amount Share (%) Amount Share (%) Amount Share (%) Amount Share (%) Amount , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,2 * Others represent the countries of imported spot LNG As seen at Table 2.1; Turkey is dependent on imports mainly for the gas coming from Russia. Change (%) 8

23 Algeria 8,36% Nigeria 2,43% Others* 8,70% Azerbaijan 11,85% Russia 51,93% Iran 16,74% * OTHERS REPRESENT THE COUNTRIES OF IMPORTED SPOT LNG.. Graph 2.1: Share of Imported Natural Gas by Source Country in 2017 (%) % 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Russia Iran Azerbaijan Algeria Nigeria Others* Graph 2.2: Changes in the Share of Source Countries for Natural Gas Import between * Others represent the countries of imported spot LNG. 9

24 The import amounts of companies that imported natural gas between the years are shown in Table 2.2 according to the gas type. The share of LNG imports in total imports increased and also the amount of pipeline gas imported in 2017 increased compared to the amount of pipeline gas imported in Table 2.2: Import Quantities of Natural Gas Imported by Companies (Million Sm 3 ) and Shares (%) Between Gas Type Pipeline Gas LNG Total Year Amount Share (%) Quantity Share (%) Amount ,44 87, ,54 12, , ,41 85, ,87 14, , ,11 84, ,96 15, , ,48 83, ,68 16, , ,67 80, ,28 19, ,95 The amount of natural gas imports by companies in 2017 is shown in Table 2.3. BOTAŞ imported 82,51 % of the total amount (pipeline gas and LNG totally) in Table 2.3: Import Amounts by the Companies in 2017 (Million Sm 3 ) Company Name Amount Share (%) BORU HATLARI İLE PETROL TAŞIMA A.Ş ,37 82,51 ENERCO ENERJİ SANAYİ VE TİCARET ANONİM 2.325,01 4,21 AKFEL GAZ SANAYİ VE TİCARET ANONİM 2.082,35 3,77 BOSPHORUS GAZ CORPORATİON ANONİM 2.081,99 3,77 BATI HATTI DOĞALGAZ TİCARET ANONİM 962,07 1,74 KİBAR ENERJİ ANONİM 961,79 1,74 EGE GAZ ANONİM 517,14 0,94 AVRASYA GAZ ANONİM 491,24 0,89 SHELL ENERJİ ANONİM 244,00 0,44 Total ,

25 AKFEL 3,77% AVRASYA 0,90% BOSPHORUS 3,77% BATI HATTI 1,74% KİBAR ENERJİ 1,74% EGE GAZ 0,94% AVRASYA GAZ 0,89% SHELL ENERJİ 0,44% BOTAŞ 82,51% Graph 2.3: Share of Companies in Natural Gas Import in 2017 Import amounts according to entry points are shown of in 2017 at Table 2.4 and monthly comparison at Graph 2.4. As it is shown, the entry points of Russian natural gas took the first two place with 51,93% share. Table 2.4: Comparison of Imported Natural Gas Entering Point of the System in 2017 (Million Sm 3 ) Entry Points Amount of Imported Natural Gas Share (%) DURUSU ENTRY POINT ,85 28,21 MALKOÇLAR ENTRY POINT ,78 23,72 GÜRBULAK ENTRY POINT 9.250,64 16,74 TÜRKGÖZÜ ENTRY POINT 6.544,40 11,85 EGEGAZ ALİAĞA LNG TERMINAL 4.235,28 7,67 MARMARA EREĞLİSİ LNG TERMINAL 3.676,33 6,65 ETKİ LNG TERMINAL 2.744,23 4,97 DÖRTYOL FSRU TERMINAL 109,44 0,20 Total ,95 100,00 11

26 Amount of natural gas imported in 2017 increased by 19,2% compared to Monthly comparison is shown in Table 2.5 and Graph 2.4 Table 2.5: Monthly Comparison of Imported Natural Gas between (Million Sm 3 ) January 4.536, , , , ,34 February 4.095, , , , ,73 March 3.889, , , , ,27 April 3.447, , , , ,26 May 3.512, , , , ,77 June 3.143, , , , ,89 July 3.404, , , , ,45 August 3.268, , , , ,73 September 3.526, , , , ,77 October 3.545, , , , ,10 November 3.936, , , , ,85 December 4.962, , , , ,79 Total , , , , , , , , , , , , Graph 2.4: Monthly Comparison of Imported Natural Gas between (Million Sm 3 ) As seen in Graph 2.5, in 2017, ,28 million Sm 3 LNG (Long Term and Spot) was imported 12

27 and this amount was 19,48 % of total import. LNG 19,48% Pipeline 80,52% Graph 2.5: Share of Pipeline Gas and LNG in Total Import in 2017 (%) While 91,30 % of natural gas imported in 2017 was as part of long term import license, 8,70 % was spot LNG. Spot LNG 8,70% Long Term Import 91,30% Graph 2.6: Share of Natural Gas Imported by Long Term Import and Spot LNG in 2017 (%) 13

28 Companies, holding long term import licenses, imported natural gas mostly from Russia and Iran respectively. Azerbaijan 12,97% Algeria 9,15% Nigeria 2,66% Iran 18,34% Russia 56,87% Graph 2.7: Amount of Imported Natural Gas by Long Term d Companies by Source Countries in 2017 (%) As seen at Table 2.6, spot LNG was imported in 11 months of Table 2.6: Monthly Data of Long Term Import and Spot LNG Import in 2017 (Million Sm 3 ) Jan. Feb. March April May. June July Aug. Sep. Oct. Nov. Dec. Total Pipeline 4.209, , , , , , , , , , , , ,66 LNG ,05 747,71 331,51 461,72 249,3 300,61 427,03 356,17 361,86 516,25 743, ,08 Spot LNG 855,01 881,63 294,61 96,69-133,41 95,34 99,63 92,07 133,88 888, , , , , , , ,00 - Pipeline LNG Spot LNG Graph 2.8: Monthly Comparison of Long Term Import and Spot LNG Import in 2017 (Million Sm 3 ) 14

29 77,45% of LNG import was from Algeria and 22,55 % was from Nigeria as part of long term agreements. Table 2.7: Long Term LNG Import between (Million Sm 3 ) Country Change (%) Algeria 3.684, , , , ,10 7,77 Nigeria 1.273, , , , ,98 10,19 Total 4.957, , , , ,08 8, , , , , , , , , , , Algeria Nigeria Graph 2.9: Long Term LNG Import Amounts by Source Countries between (Million Sm 3 ) Graph 2.10: Change in Spot LNG Import Amount between (Million Sm 3 ) 15

30 Spot LNG import had 8,7 % share in total natural gas import in In addition, spot LNG was imported from 8 different countries. Among these countries, Qatar was the first with a share of 32,51 % and Norway followed with a share of 17,77 %. Details are given at Table 2.8 and Graph Table 2.8: Spot LNG Import by Countries in 2017 (Million Sm 3 ) Country Name Amount Qatar 1.561,64 Norway 853,76 US 767,58 Nigeria 735,75 Trinidad and Tobago 419,29 Equatoril Guinea 286,49 England 93,4 Netherlands 86,3 Total 4.804,20 Equatoril Guinea 5,96% Trinidad ve Tobago 8,73% England 1,94% Holland 1,80% Qatar 32,51% Nigeria 15,31% US 15,98% Norway 17,77% Graph 2.11: Spot LNG Import by Countries in 2017 (%) By the end of 2017, there were 43 companies holding import (spot LNG) license. Only 2 of them (BOTAŞ and EGEGAZ) imported spot LNG in out of the resting 41 companies sold 16

31 gas supplied from domestic wholesale market. Remaining 28 companies had no operation within the scope of their licenses in Spot LNG imported by BOTAŞ and EGEGAZ is shown below at Table 2.9 and Graph Table 2.9: Share of Spot LNG Importers between (%) EGE GAZ BOTAŞ ,46 91, ,66 62, ,83 86, ,8 97, ,62 75, ,36 94, ,79 89, ,89 88, ,76 89, % 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% EGE GAZ BOTAŞ Graph 2.12: Share of Spot LNG Importers between (%) 17

32 2.2 Production-Import Evaluation In 2017, the amount of natural gas was 354,15 million Sm 3, extracted from domestic fields, cleaned and refined and then sent to transmission grid via collection lines, in other words offered for sale after production by wholesale licensed production companies. Increasing natural gas demand in Turkey and limited reserve and production to meet this demand necessitated natural gas import in 2017 as previous years. As seen at Graph 2.13, 0,64 % of total natural gas supply was domestic and the rest 99,36 % was met from different foreign sources by import licensees. Production 0,64% Import 99,36% Graph 2.13: Share of Total Natural Gas Supply by Origin in 2017(%) 18

33 2.3 Export Imported or domestically produced natural gas can be exported by export licenses to countries which are listed at their licenses. In 2016 as previous, only BOTAŞ operated as an export licensed company. BOTAS has started natural gas export to Greece with the completion of Turkey-Greece Natural Gas Interconnector on 18/11/2007 and natural gas amounts exported to Greece are given at Table 2.10 by years. Table 2.10: Exported Natural Gas Amounts between (Million Sm 3 ) Years Amount 435,8 708,5 648, ,63 623,94 674,68 630, , , ,63 623,94 674,68 630,67 435, Graph 2.14: Annual Natural Gas Export Amounts (Million Sm 3 ) 19

34 Table 2.11: Monthly of Natural Gas Export Amounts by Years (Million Sm 3 ) Jan. Feb. March Apr. May June July Aug. Sep. Oct. Nov. Dec. Total ,3 45,4 33,8 59,5 37,8 67,5 61,7 59,7 67,8 72,8 71,9 58,2 682, ,3 62,4 58,2 37,7 26,4 52,4 70,1 74,9 70,6 22,6 33,6 54,6 632, ,3 46,9 67,6 52,1 52, ,2 72,7 61,2 45,1 33,7 67,4 623, ,9 15,2 66,2 70,8 72,2 70,4 36,3 61,1 59,1 58,3 39,3 74,7 674, ,7 34,2-61,6 30,0 55,5 70,4 58,8 58,0 45,4 69,4 61,8 630,7 Graph 2.15: Monthly Comparison of Natural Gas Exported between (Million Sm 3 ) 20

35 3. Storage In 2017, the capacity of natural gas and the amount of stock incrased rapidly compared by previous year with coming into operation of Etki LNG s in 2016 and Botaş Tuz Gölü s in 2017 underground natural gas warehouses. By the end of the 2017, the total capacity of underground natural gas warehouses entered into the system has reached to million Sm3. The capacity of LNG station to store LNG was 0,943 million m3. Table 3.1 shows existing storage facilities total stock amount by months( with evaluating the stock amount of LNG station to Sm3 natural gas). Table 3.1: Month End Natural Gas Stock Amounts by Years (Million Sm 3 ) Jan. Feb. March Apr. May June July August Sep. Oct. Nov. Dec , , , , , , , , , , , , ,03 771,25 760, , , , , , , , , , , ,49 599, ,76 644,68 927, , , , , , , , ,30 884, , , , , , , , , , ,18 919,16 976, , , , , , , , , , , , , , , , ,00 0,00 Jan. Feb. March Apr. May June July August Sep. Oct. Nov. Dec. Graph 3.1: Month End Natural Gas Stock Amounts by Years (Million Sm 3 ) 21

36 As seen at Graph 3.1, stocks started to increase by early May and started to decrease rapidly by the end of November. Evaluation of stocks with import and consumption in 2017 is given at Graph , , , , , , ,00 0,00 Jan. Feb. March Apr. May June July August Sep. Oct. Nov. Dec. Import Consumption Storage Graph 3.2: Comparison of Monthly Import/Consumption/Stock Amounts in 2017 (Million Sm 3 ) As seen at Graph, in summer periods with similar import amounts, with the decreasing consumption, injection started in May and storage stock levels started to increase. Although import amounts increase at winter periods, injection decrease because of heavy consumption. 3.1 Underground Gas Storage After BOTAŞ Tuzgölü Undergorund Gas Storage Facility came into operation with the approval of its Basic Operations Procedure and Principles by the Board, the number of storage facilities rised to 2. Also, in 2017 the number of shippers used BOTAŞ Silivri Underground Gas Storage Facility rised from 8 to 23, 15 of them were import license holders and 8 were wholesale license holders. While, only 1 shipper used BOTAŞ Tuzgölü Undergorund Gas Storage Facility in LNG Storage Basic Operations Procedure and Principles of BOTAŞ Dörtyol Floating Storage and Regasification Unit (FSRU) was approved by the 09/11/2017 dated and 7433 numbered Board 22

37 Decision and promulgated by 14/11/2017 dated and numbered Official Gazette. Despite the facility was not effective in practice, the stored amount of LNG in tanks increased due to reasons like the increase in total LNG trade and the technical problems in Etki Liman FSRU facility. The monthy amounts of LNG delivered to road tankers and sent to transmission network are depicted at Table 3.2. Table 3.2: Delivered Natural Gas Amounts from LNG Terminals in 2017 (Million Sm 3 ) Sent to transmission network Delivered to road tankers January February March April May June July 1.654, ,36 923,99 396,83 462,24 298,74 330,00 400,74 368,79 555, , , ,28 43,36 39,02 41,24 47,79 54,08 51,19 61,34 62,31 60,70 68,90 65,52 58,07 653,51 Total 1.697, ,38 965,24 444,62 516,32 349,93 391,34 463,04 429,48 624, , , ,79 August September October November December Total 23

38 4. Sale of imported or domestically produced natural gas to, import, export, distribution, other wholesale companies and to eligible consumers was performed by wholesale licensees. As it is known, import licensees could perform wholesale activity without getting a wholesale license. As seen at Graph 4.1, natural gas supply of Turkey in 2017 was realized as ,09 million Sm 3 and 80,39 % of this amount was met by BOTAŞ, 17,38 % was met by other import licensed companies and 0,64 % was met by producer wholesale companies. Other importers 17,38% Producer wholesale companies 0,64% BOTAŞ 80,39% Graph 4.1: Share of Import and Production Companies in Natural Gas Supply in 2017 (%). By the end of 2017, there were 49 wholesale licencees, 11 of them realized natural gas production, while 16 wholesale licencees did not have any operation in practice. As it is stated before, import licensees can perform wholesale activity without getting a wholesale license 24

39 By the end of 2017, there were 17 long-term import licenses belonging to 8 licensees. These 8 licensees, including BOTAŞ and other 7 companies (Shell, Avrasya Gaz, Enerco, Kibar, Batı Hattı, Akfel ve Bosphorus Gaz), performed wholesale activity with the natural gas they imported or supplied from domestic market. By the end of 2017, there were 43 spot-lng import licensees. Among those, only 2 of them (BOTAŞ and EGEGAZ) imported LNG in the spot market. While, 22 licensees performed wholesale activity with the natural gas they supplied form the domestic market, the rest had no operations in practice. 25

40 4.1 Organized The Regulation on Organized of Natural Gas, which enables the shippers to trade and eliminate their imbalances within the national transmission network, became effective after being promulgated on the Official Gazette 31/03/2017 dated and numbered. Also, the final version of the procedures and principles about the Organized of Natural Gas became effective being promulgated on the Official Gazette 23/11/2017 dated and 7454 numbered. 4.2 by Pipelines In 2017, wholesale operations were done by 50 licensees.. Some of them were natural gas producers, some of them were natural gas importers and some of them were only wholesalers involving about the trade of natural gas.. Sales as pipeline gas are shown at Table 4.1 according to license types. Table 4.1: Amounts of s as Pipeline Gas According to Types (Million Sm 3 ) Type Number of Companies selling to licensed companies Sale Amounts to d Companies Long Term Import , ,54 Spot (LNG) Import ,77 (Producer) ,65 Total ,67 Proportional distribution of pipeline sales to licensees is given at graph below according to license types. 26

41 26,3% 49,6% 0,61% Import 16,51% Transmission * 5,49% Export 1,49% *The Transmission license-owner purchases the balancing gas, internal usage gas and stock gas from the domestic market. Graph 4.2: Proportional of Pipeline s to d Companies According to Types (%) 4.3 of LNG When transmission of natural gas by pipelines is impossible or technically or economically infeasible, natural gas is utilized as LNG and it is carried to final consumers by road tankers. Some of imported natural gas coming from Marmara Ereğlisi and Aliağa LNG facilities was sold again in LNG form by wholesale licensees. Amount of natural gas sold as LNG was 660,07 million Sm 3. In 2017, gas sale to final consumers in the form of LNG was realized by 7 companies, and share of total LNG sales is shown at Table 4.2. Table 4.2: Amounts of LNG Sales According to Types (Million Sm 3 ) Type Number of Companies Selling to d Companies Sale Amounts to d Companies Spot (LNG) Import 1 427,17 Long Term Import 1 226,34 5 6,56 Total 7 660, Natural Gas Trade between es Operating in Natural Gas Market Amount of gas traded between companies operating in natural gas market in 2017 is given at Table

42 Table 4.3: Amount of Gas Traded between Companies Operating in Natural Gas Market in 2017 (Million Sm 3 ) Type Amount Import 64, , ,74 license 1.959,72 Total 37, ,64 *A company who has transmission license does not hold wholesale operations. The sales of this company contain sales as balancing gas. In 2017, 95,34 % of sales made to license holders were performed by companies that have import and wholesale licenses. The share of the import licensed companies in sales was 79,51 % Aforementioned ,64 million Sm 3 gas was supplied by 75 companies. The top 10 companies which supplied the largest amounts are given at Table 4.4. Table 4.4: Amount and Share of 10 Companies which Supply the Largest Amounts to Companies Operating in Natural Gas Market (Million Sm 3 ) Trade Name Amount of Sales Share (%) BOTAŞ (BORU HATLARI İLE PETROL TAŞIMA ANONİM )* ,11 46,04 ENERCO ENERJİ SANAYİ VE TİCARET ANONİM 2.522,62 5,97 AKFEL GAZ SANAYİ VE TİCARET ANONİM 2.267,73 5,36 BOSPHORUS GAZ CORPORATİON ANONİM 2.009,83 4,75 EWE ENERJİ ANONİM 1.880,40 4,45 DOĞAL ENERJİ İTHALAT ANONİM 1.560,06 3,69 AKFEL ENERJİ TİCARET ANONİM 1.270,51 3,00 KİBAR ENERJİ ANONİM 967,71 2,29 BATI HATTI DOĞALGAZ TİCARET ANONİM 966,65 2,29 GLOBAL MADEN DOĞALGAZ PETROL VE KİMYA SAN. VE TİCARET ANONİM 771,26 1,82 *Natural gas sale of BOTAŞ within the scope of transmission license is excluded. The amount of gas purchases by licensed companies operating in natural gas market from other licensed companies in 2017 is given at Table

43 Table 4.5: Amount of Gas Purchases by d Companies Operating in Natural Gas Market from Other d Companies in 2017 (Million Sm 3 ) Type Amount , ,42 Import 8.380,68 Transmision * 2.321,44 Export 630,67 259,8 Total ,49 *The company who has transmission license does not operate wholesale operation in the market. The amount of gas bought by transmission license owner is comprised of stabilization and internal usage quantities. In 2017, distribution license holders were the largest purchaser of natural gas with a share of 47,4 %. license holders were followed by wholesale license holders with 26,4 %. There were 134 companies which purchased natural gas from domestic market. The top 10 companies which purchased the largest amounts are listed at Table 4.6. Table 4.6: Amount and Share of 10 Companies which Purchased the Largest Amounts from Companies Operating in Natural Gas Market (Million Sm 3 ) Amount of Share Company Purchased Gas (%) İGDAŞ İSTANBUL GAZ DAĞITIM SANAYİ VE TİCARET ANONİM 6.508,13 15,76 BAŞKENT DOĞALGAZ DAĞITIM GAYRİMENKUL YATIRIM ORTAKLIĞI ANONİM 2.631,89 6,37 EWE ENERJİ ANONİM 2.538,38 6,15 DOĞAL ENERJİ İTHALAT ANONİM 1.697,85 4,11 AYGAZ DOĞAL GAZ TOPTAN SATIŞ ANONİM 1.384,62 3,35 AKFEL ENERJİ TİCARET ANONİM 1.270,51 3,08 OMV ENERJİ TİCARET ANONİM 1.210,14 2,93 BOTAŞ (BORU HATLARI İLE PETROL TAŞIMA ANONİM )* 1.186,69 2,87 SOCAR TURKEY PETROKİMYA ANONİM 1.130,94 2,74 BURSA ŞEHİRİÇİ DOĞAL GAZ DAĞITIM TİCARET VE TAAH. ANONİM 874,17 2,12 *The natural gas purchases of of transmission licensee is excluded. 29

44 5. Compressed Natural Gas () Activities could be performed by licensed companies according to their licenses are listed below: -Purchasing natural gas from well head, national transmission network or distribution system and then compressing of gas and filling to pressured containers and sales, -Intercity transmission of compressed natural gas by special vehicles, -Sale of natural gas supplied from sale stations and/or purchased from well head of producer companies and compressing filling gas to pressured containers. Also, with the amendment on the Regulation of Licensing in the Natural Gas Market, promulgated on the Official Gazette 24/05/2017 dated and numbered, two new lincense types as (Auto-LNG) and Auto- s and the right of selling as fuel to vehicles were introduced. In this context, 14 Sales s were transformed to Auto- licenses and 1 new Auto- license was granted in In 2017, 259,94 million Sm 3 natural gas was purchased by licensed companies while 1,78 % of this amount was in LNG form. Sale shares of supplier companies to licensees according to their license type are shown at Graph ,94% 13,99% Distiribution 24,63% Import 54,43% Graph 5.1: Sale Shares of Supplier Companies to (Sale) d Companies According to Their Type (%) 30

45 Auto- 2,78% Transmission 9,88% Sales 87,35% Graph 5.2: Share of Sales to Final Consumer by Types in 2017 (%) In 2017, license owners sold 222,09 milyon Sm 3 to final customers. Graph 5.2 shows sales amounts to final customers by license type. According to this graph, 87,35% of sales to the final customers were realized by Sale es. The share of sales held with Auto- license was 2,78%. In 2017, the sales amount of es which was transformed to Auto- es is given in Sales until the time of transformation, and the amount after that transformation process, is given in the Auto- form.. sale amounts to final consumers between are shown at Table 5.1. Table 5.1: Sale Amounts to Final Consumers between (Million Sm 3 ) Years Amount 36,5 33,9 46,2 55,5 54,9 76,6 120,09 178,93 191,78 222,09 31

46 6. Transmission Transmission of natural gas via pipelines is conducted by BOTAŞ in Turkey. According to the 4646 numbered Natural Gas Market Law, it is projected that public legal entity character of transmission company, which will be one of the companies ensued as the result of restructuring of BOTAŞ as a horizontally integrated legal entity, will continue. The possibility of third party access to network, in other words, companies except the owner or the operator of network can carry their natural gas via transmission network, which means they can enter to market, results in a more competitive market. Within the scope of related EU Directives and regulations about third party access to network, third party access to transmission network is regulated and the reasons of refusal to third party access to network are ruled. With the aim of defining procedures and principles of regulations related about network operations prepared by transmission companies, 26/10/2002 dated and numbered Natural Gas Market Transmission Network Operating Instructions dated 26/10/2002 and numbered 24918, was published in the Official Gazette. These instructions contain procedures and principles related items listed below; -Entry to system as part of regulations related network operation prepared by transmission companies which are operating via natural gas pipelines. -Transportation amount reporting and transportation service programming. -Transportation amount determination, cut process, delivery controlling, system balancing, communication system, capacity assignment, delivery and measurement of natural gas. 6.1 Transmission via Pipelines In 2017, 56,08 billion Sm 3 of natural gas delivered by import and wholesale licensees operating in at natural gas market to transmission network at 11 Entry Points (Malkoçlar, M. Ereğlisi LNG Terminali, Durusu, Doğubeyazıt-Gürbulak, Azerbaycan-Türkgözü, EGEGAZ Aliağa LNG, Silivri Depo, TP Akçakoca, ETKİ LNG, Tuz Gölü Depo, MARSA Gelibolu). 82,81 % of this amount wasrealized by BOTAŞ and 17,19 % was realized by private sector importers and wholesalers. On the other hand, in 2017, 55,84 billion Sm 3 of natural gas was withdrawed from transmission network. Peak entry and withdrawal amounts realized in winter period of 2017 when natural gas demand was high. The monthly distribution of natural gas entries to transmission network and withdrawals from transmission network are depicted at Graph

47 Entry to Network Exit From Network Graph 6.1: Monthly of Total Natural Gas Amounts Entered into Transmission Network and Withdrawn from Transmission Network (Million Sm 3 ) In 2017, the highest daily withdraw (peak demand) from natural gas transmission grid realized as 243,01 million Sm 3 on 14/02/2017. The distribution of the highest daily withdrawals realized in each month is given at Graph 6.2. Table 6.1: The highest Daily Withdrawal (Peak Demand) from Natural Gas Transmission Network by Month (Million Sm 3 ) Jan. Feb. March April May June July August Sep. Oct. Nov. Dec. The Highest Daily Withdrawal 232,88 243,01 196,40 157,14 130,94 132,66 139,06 136,63 134,41 171,05 213,06 229,33 33

48 Graph 6.2: The Highest Daily Withdrawal (Peak Demand) from Natural Gas Transmission Network by Month in 2017 (Million Sm 3 ) In 2017, 387,79 million Sm3 internal usage gas of national transmission network. The monthly amounts of internal usage gas is given atthe Table 6.2. Table 6.2: Amount of the Internal Usage Gas in 2017 by Months (Million Sm 3 ) Jan. Feb. March April May June July August Sep. Oct. Nov. Dec. Total Amount 35,30 30,50 34,53 33,24 28,70 32,19 38,20 32,29 26,73 30,44 33,78 31,85 387,76 The monthly stock gas amounts in the national transmission network is given in the Table Table 6.3: The amount of National Transmission Network s Stock by Month (Million Sm 3 ) Month Amount Jan. 345,15 Feb. 385,53 March 396,29 April 381,75 May 375,68 June 368,69 July 369,06 August 415,89 Sep. 393,19 Oct. 383,69 Nov. 393,13 Dec. 417,13 34

49 In 2017, natural gas was physically transported by 19 entering shippers and 32 exiting shippers in national natural gas transmission network. In addition, there were 34 entering shippers and 33 exiting shippers at virtual trade points. To talk about the commercial activity of shippers in transmission network, virtual trade realized by shippers at the National Balancing Point (NBP) of transmission network and at transfer points was totally 15,88 billion Sm 3. 43,53 % of this virtual trade volume was held at NBP and 56,47 % was held at transfer points. 93,5 % of the virtual trade was conducted by private sector shippers and 6,5 % was conducted by BOTAŞ. Monthly breakdown of virtual trade volumes in 2017 is shown at Graph Transfer Point National Balancing Point Total Virtual Trade Graph 6.3: Monthly of Virtual Trade Volumes in 2017 (Million Sm 3 ) Shippers have caused 2.817,53 million Sm 3 of imbalance in transmission grid in The amount of net imbalance during the year was 1.101,91 million Sm 3. Imbalances increased especially in winter periods when natural gas demand was high and in summer periods when electricity demand soared because of cooling. 69,55 % of imbalances was in negative direction while 30,45% was in positive direction. Monthly distribution of positive, negative and net imbalances are depicted on Graph

50 Positive Imbalances Negative Imbalances Net Imbalance Amount Graph 6.4: Monthly of Imbalance Amount in 2017 (Million Sm 3 ) End-of-day trade volume, which shippers held to eliminate their imbalances as an extra tool after gas-day, was 875,75 million Sm 3 in End-of-day trade 50 0 Graph 6.5: Monthly of End-of-Day Trade in 2017 (Million Sm 3 ) 36

51 6.2 LNG Transmission According to the Law, transmission activity could be also conducted by LNG transportation vehicles other than national transmission grid under the condition of getting license from the Authority. In 2017, 837,28 million Sm 3 of LNG was carried by 9 transmission (LNG) licensees. The transmitted LNG amounts on monthly and yearly basis are given at table below. Table 6.2: Monthly Transmitted LNG Amount by Years (Million Sm 3 ) Jan. Feb March April May June July August Sept. Oct. Nov. Dec. Total ,09 45,50 51,05 49,26 55,73 53,86 55,96 63,35 66,11 61,74 62,16 51,97 666, ,01 40,74 46,15 52,46 58,31 61,06 59,30 67,08 57,05 71,80 66,31 62,96 691, ,14 44,27 48,57 50,17 59,64 62,01 55,76 69,44 57,61 73,41 70,00 62,55 702, ,03 50,05 54,68 62,80 71,15 65,46 76,79 80,08 74,68 87,63 84,06 73,87 837,28 * The amounts of natural gas that LNG Conveying Companies contract to each other are included in the table. Table 6.5: Monthly Transmitted LNG Amount by Companies (Million Sm 3 ) Company Jan. Feb. March Apr. May June July Aug. Sep. Oct. Nov. Dec. Total ULTRANS TAŞIMACILIK SANAYİ VE TİCARET LİMİTED 12,36 12,02 13,34 16,19 18,97 16,44 18,40 19,86 18,64 22,59 22,60 19,82 211,22 İPRA ENERJİ ANONİM 15,96 14,15 14,84 15,59 17,24 16,54 17,93 19,20 17,26 20,26 17,61 18,20 204,78 OMV GAZ İLETİM ANONİM 11,42 10,58 11,43 13,66 16,13 13,62 17,01 17,50 16,44 19,23 20,42 17,43 184,86 AYGAZ DOĞAL GAZ İLETİM ANONİM 6,46 5,64 6,65 7,95 9,51 8,90 11,20 10,58 10,66 11,24 9,41 7,33 105,54 HABEL SINAİ VE TIBBİ GAZLAR İSTİHSAL ENDÜSTRİSİ ANONİM 4,88 4,23 4,57 5,29 5,02 5,87 7,37 7,69 7,42 8,57 7,80 5,89 74,59 ENERJİ GRUP İLETİM NAKLİYAT VE TAŞIMACILIK ANONİM 1,77 1,63 1,19 1,08 1,21 1,24 1,42 1,80 1,36 2,23 2,24 2,20 19,36 EGELOG DOĞALGAZ AKARYAKIT TAŞIMACILIK VE DEPOLAMA TURİZM LİMİTED 1,12 1,02 1,13 1,59 1,48 1,15 1,60 1,59 1,24 1,56 2,13 1,27 16,88 VENTES LOJİSTİK ANONİM 0,01 0,01 0,92 0,95 0,96 1,05 1,14 1,20 0,96 1,21 1,12 0,93 10,44 AK-CAN DOĞAL GAZ İLETİM LİMİTED 2,06 0,79 0,63 0,50 0,63 0,67 0,73 0,66 0,69 0,74 0,73 0,79 9,61 Total 56,03 50,05 54,68 62,80 71,15 65,46 76,79 80,08 74,68 87,63 84,06 73,87 837,28 37

52 Graph 6.6: Monthly Transmitted LNG Amount by Years (Million Sm 3 ) 38