Analysis of the Liberalization of the Turkish Natural Gas Market

Abstract

Natural gas is used as a bridge fuel during the ongoing transition from fossil fuels to renewables because it produces less carbon emissions than oil and coal. In addition, countries, which are aiming to become more carbon neutral, are replacing coal with natural gas. These reasons have led the natural gas industry to grow and the gas business has gained an international dimension. In order to keep up with these developments, countries liberalize their gas markets by opening them to competition. The two important pillars of liberalization are third-party access to the physical infrastructure and the demolition of monopolies in the market. The European Union (EU) has implemented a series of reforms to be able to fully liberalize its internal gas markets. Turkey, the fourth largest gas-consuming country in Europe, has also made a series of reforms in order to harmonize with Europe during the EU accession process since 2001. However, Turkey’s goals to open its internal gas market to competition have only been partially achieved. The main purpose of this study is to analyze the performance of the Turkish natural gas market and to determine to what extent gas market reforms have been successful. The results of a detailed examination of the market and the survey carried out among the major market players have shown that the Turkish natural gas market should be improved in transparency, competitiveness, and cost-based pricing.