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Opening the Southern Gas Corridor
Contribution of new supply sources and transit routes for establishing a TR gas hub
Dr. Cenk Pala, TAP Government Affairs Advisor Turkey
OUTLINE
Turkey’s Excellent Geographical Location on Gas Map
Short History of 4th Gas Corridor
TANAP/TAP Opening up the Southern Gas Corridor
Current Supply Sources to Turkey With Only Small Idle Capacities
Turkish Natural Gas Market is Tight
Turkish Natural Gas Demand and Supply Developments
Import Projects to Turkey/Europe – Fundamental for Becoming a Gas Hub
Liberalising Turkish Natural Gas Market Is Indispensable
The Answer
Turkey’s Excellent Geogrophical Location on Gas Map
R ussia
R e s e r v e s : 3 2 .9
tc m(Total share : ~17%)
Consumption : 416 bcmProduction : 592 bcm Russia
Reserves : 32.9 tcm
(Total share : ~17%)
Consumption : 416 bcm
Production : 592 bcm
Turkm enistan
R e s e r v e s : 1 7 .5 tc m(Total share : ~9.3%)
Consumption : 23.3 bcmProduction : 64.5 bcm
TurkmenistanReserves : 17.5 tcm
(Total share : ~9.3%)
Consumption : 23.3 bcm
Production : 64.5 bcmIran
R e s e r v e s : 3 3 .6 tc m(Total share : ~18%)
Consumption : 156.1 bcmProduction : 160.5 bcm
IranReserves : 33.6 tcm
(Total share : ~18%)
Consumption : 156.1 bcm
Production : 160.5 bcmIraq
R e s e r v e s : 3 .6 tc m(Total share : ~1.9%)
Consumption : - bcmProduction : 0 .8 bcm
IraqReserves : 3.6 tcm
(Total share : ~1.9%)
Consumption : - bcm
Production : 0.8 bcmQ atar
R e s e r v e s : 2 5 .1 tc m(Total share : ~13.4%)
Consumption : 26.2 bcmProduction : 157 bcm
QatarReserves : 25.1 tcm
(Total share : ~13.4%)
Consumption : 26.2 bcm
Production : 157 bcm
A zerbaijan
R e s e r v e s : 0 .9 tc m(Total share : ~0.5%)
Consumption : 8.5 bcmProduction : 15.6 bcm
AzerbaijanReserves : 0.9 tcm
(Total share : ~0.5%)
Consumption : 8.5 bcm
Production : 15.6 bcm
Israel
R e s e r v e s : 0 .9 tc m(Total share : ~0.5%)
Consumption : 2.6 bcmProduction : 3 bcm
IsraelReserves : 0.9 tcm
(Total share : ~0.5%)
Consumption : 2.6 bcm
Production : 3 bcm
A lgeria
R e s e r v e s : 4 .5 tc m(Total share : ~2.4%)
Consumption : 30.9 bcmProduction : 81.5 bcm
AlgeriaReserves : 4.5 tcm
(Total share : ~2.4%)
Consumption : 30.9 bcm
Production : 81.5 bcm
Turkey is surrounded by vast natural gas reserves.........
Source: BP Statistical Report 2013
..but becoming a real gas hub will require more: there is a stoney way to first become a gas corridor and then develop to a gas hubTurkey is
surrounded by
63%of W orld N G
R eserves
Turkey is surrounded by
63%of World NG
Reserves
Gas from Caspian Region
Azeri, Turkmen etc...
Upstream
Turkish Section(BOTAŞ)
Greece SectionDEPA)
Adriatic Sea Crossing
Marmara Sea
Crossing
ITG
IGI
Downstream
Gas from Middle
East Iran, Iraq, Egypt, Syria etc...
History: Gas to Europe – Southern Route
Botaş, Depa, Edison Gas In total 12 bcm : Greece (3.6) & Italy (8) Start with late 2006 to reach plateau capacity in 2012
DISQUALIFIED IN FEB. 2012
Azerbaijan10-15 bcm/y
Iran20-30 bcm/y
Iraq10 bcm/y
Syria/Egypt6+2 bcm/y
Gas to Europe - NABUCCO the ORIGINAL
Botaş, Bulgargaz, Transgaz, MOL, OMV Gas 25-31 bcm target market Start with 2011
SCALED DOWN AS NABUCCO WEST IN 2012
TANAP/TAP Opening up the Southern Gas Corridor
2013 2014 2015 2016 2017 2018 2019
Pipeline ConstructionTAP Selection
Q4 2013 Resolution to Construct
Q4 2013 Shah Deniz II
FID
End of 2014 Final Contract
Award
Jan 2019First gas TAP startsoperation
TANAP and TAP will be the first pipeline to open the Southern Gas Corridor
TANAP and TAP supports the EU’s initiative to enhance Europe’s energy security by connecting to new sources of natural gas in the Caspian Sea
1. Drilling of wells2. Offshore production3. Onshore processing Sangachal Terminal4. SCP
5. TANAP6. TAP7. Expansion of Italian network (SRG)8. Further transport to western Europe
Southern Gas Corridor
Complete Value Chain - investment of approx. USD 50 bln
213
4
5
67
8
Crossing 6 countries – 4,000 km; more than 10 energy companies involved
TAP's key features
Aligned with EU’s energy policy objectives
• Designed to expand from 10 to 20 bcm (plus) per year
• Built-in physical reverse flow and potential gas storage
• Connecting directly to TANAP on the Turkish-Greek border
• Interconnection with various existing and proposed pipelines providing energy security in South Eastern Europe
• Providing Bulgaria with a new source of gas through IGB or Kula-Sidirokastro Interconnector
• Delivering gas and interconnecting to multiple markets in Western and Central Europe
8
?
?
?
Current Supply Sources to Turkey withOnly Small Idle Capacities
LNG(Spot )
WEST LINE
- BOTAŞ 4 bcm 2023- Private-I 4 bcm 2023- Private-II 6 bcm 2043
BLUE STREAM
- BOTAŞ 16 bcm 2028
AZERBAIJAN
- BOTAŞ 5.4 bcm 2022- SOCAR* 1.2 bcm 2022
IRAN
- BOTAŞ 10 bcm 2026
ALGERIA- BOTAŞ 4 bcm 2024NIGERIA-BOTAŞ 1.2 bcm 2021
*Note: 1.2 bcm is a volume transfer from Azeri BOTAŞ contract to Socar.
Turkey has access to major supply sources through 4 import pipelines and 2 LNG regasification terminals.
Turkish Natural Gas Market is Tight
Long term import contracts have become insufficient to meet winter demand
Source: EMRA, Turkey
Supply problems were already faced during peak demand periods due to insufficient supply and infrastructure capacites
bcm
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201395% Supply Contracts
12 14 14 14 1518 18 20 20 21 22 21
1523 4
79
10 10 710
12 1013
13
34 5
67
8 98
8
11 14 12
9
5.463.8
1.1410% CAGR between 2002 – 2012
*All Values are in standard cubic meters at 9155 kcal/m3
Blue Stream
West Line
Iran
Azerbaijan
Algeria
Nigeria
17 31 36 37 35 38 44 45 46 21 23 27 48
Turkish Natural Gas Demand 2002-2013 LTC Supply 2013
Power
Industry
Residential
Peak Daily Demand vs Total DailySend Out Capacity
2012170
175
180
185
190
195
200
205
210
215
220
mcm
Daily Peak Demand
Capacity
193
215
LNG, Azeri SD Phase II, Iraqi, Black Sea and Israeli volumes will compete to fill the gap between demand and supply after 2019
Turkish Natural Gas Demand and Supply Developments
0
10
20
30
40
50
60
70
80
90
2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035
Gazprom W1 Gazprom W2 Gazprom Blue Stream NIGECAGSC Sonatrach Nigerian LNG TR Demand
bcm
51.9 bcm
57.9 bcm
Contract totals if GazProm and Sonatrach contracts extended
Contract totals if Shah Deniz I is extended. 6bcm Shah Deniz II volume reflected as of 2019
Demand
Source: IHS CERA, 2013
Note: Values are in 9155 kcal/m3
Import Projects to Turkey/Europe – Fundamental for Becoming a Gas Hub
IMPORT PROJECT EXPECTED START YEAR END YEAR VOLUME
Azerbaijan (Shah Deniz II) 2019 2044 16 bcmpa
Iraqi Gas 2017 2037 10-20 bcmpa
Israeli Gas 2019 2039 8 to 10 bcmpa
Black Sea (Romanian) Gas 2019 6 bcmpa
2013 2014 2015 2016 2017 2018 2019
• Iraq 10-20 bcmpa
• Azerbaijan 16 bcmpa• Israel 8-10 bcmpa• Black Sea Gas 6 bcmpa
64-104 BCM 126-166 BCM65-70 BCM
SUPPLY POTENTIAL
TR Gas DemandTRANSIT
POTENTIAL
Transbalkan14 BCM
Blue
Stre
am
16-3
2 BCM
Egypt-Iraq15-20 BCM
AzerbaijanTürkmenistanKazakhstan30-40 BCM
Iran 30-40 BCM
LNG 12 BCM
2020 PIPELINE TARGETS OF TURKEY-BOTAS
Liberalising Turkish Natural Gas Market is Indispensible
Current Framework Major Requirements
Subsidized Tariffs are set by the government, no market fundamentals / cost reflectiveness
- Gas costs to be reflected on prices. - Complete abolishment of regulated tariffs
BOTAŞ controls 80% of wholesale volumes and import points
- No restrictions for gas imports for private players independent of the source
Insufficient infrastructure
- Attractive and reliable legal/regulatory framework to incentivize necessary infrastructure investments such as underground storages an LNG receiving terminals
Priority to BOTAŞ Non-discriminatory access to infrastructure
Turkey has an excellent potential to become a major European gas hub
but not expected before 2025 ….
and not w/o starting now to do its homework concerning gas market liberalization thus providing a stable regulatory framework to
attract foreign investments and new supply sources
Main challenges within the next years for TR on the way to establish gas hub/exchange: The prerequisite for a workable hub/exchange is liquidity. This can be secured with enough supplies, means freeing-up
of gas imports is a must. Cost based gas pricing mechanism should be introduced All kind of subsidies should be lifted-off immediately.
THE ANSWER
.