Baku Energy Forum - Natural gas prices may decrease due to abundant supplies

Natural gas prices may decrease due to abundant supplies


Natural gas prices may fall with the rising volume of gas supplies to Turkey due to the implementation of such large-scale energy projects as the Turkish Stream and the Trans Anatolian Natural Gas Pipeline project (TANAP).

Head of Turkey’s Zorlu Energy Group Sinan Ak told reporters that the realization of the projects will allow to increase the volume of supplies up to 80 billion cubic meters (bcm).

He said that the joining of Israeli gas to the projects will be the primary reason of the supply increase, mentioning that the current volume of supplies stands at 55 bcm.

“If Israeli gas is also supplied via Turkish Stream and TANAP pipelines, the volume of natural gas which will flow through Turkey can reach 90 billion cubic meters,” said Sinan Ak.

With so much abundant natural gas in the market, the decline in gas prices is inevitable, he added.

TANAP project, worth 8.5 billion, envisages transportation of gas from Azerbaijan’s Shah Deniz field to the western borders of Turkey. The length of TANAP is 1,800 kilometers with the initial capacity of 16 billion cubic meters. The gas will be delivered to Turkey in 2018, and after completion of the Trans Adriatic Pipeline’s construction, the gas will be delivered to Europe in early 2020.

The volume of secured external financing for the project currently stands at $2.15 billion, while, in perspective, the amount can reach some $3.7 billion.

The issue of Israeli gas supply was earlier discussed at a meeting between Turkey’s Energy and Natural Resources Minister Berat Albayrak and his Israeli counterpart Yuval Steinitz on the sidelines of the 23rd World Energy Congress in Istanbul. The sides also discussed the possibility of constructing a gas pipeline between the two countries.

Besides, Israel's Ambassador to Baku Dan Stav previously said his country can join the Southern Gas Corridor, while the issue can be seriously considered once the energy regulation and policy get approved in Israel.

 Being the second country in the world in terms of natural gas demand growth, Turkey keeps natural gas at the forefront of its energy policy and mainly uses the resource in power generation, residential and industrial sectors.

Turkey’s desire to diversify its gas source routes is also linked to the desire of the country to take advantage of its favorable geographic location and become a regional energy hub.