Natural gas will act as a balancing source in global energy markets during the transition to renewable energy, Turkish and Russian energy experts told press members at the Turkish-Russian Energy Experts Round Table meeting on Wednesday.
Turkish and Russian experts discussed the role of natural gas in the current climate change agenda at the meeting in Istanbul hosted by Anadolu Agency in cooperation with Russian news Agency TASS.
Speaking at the meeting, the Chair of the Institute for Energy Markets and Policies (EPPEN) Volkan Ozdemir said that natural gas would be a balancing energy source during the transition to renewable energy, while maintaining its current role among hydrocarbon sources with a 24% share.
“We are going to see growing competition among fuel sources as of 2020," he said, however, he warned that the main problem with natural gas is with its pricing.
He advised that actors in the natural gas sector focus on solutions on how it can compete with other fuels.
Focusing on the pricing mechanism, he said the question of which international currency should be used in energy trading post-2020 would be a key topic on Turkey's trade agenda.
Ozdemir referenced the possibility of a global recession, similar to the one witnessed in 2008, and warned that the natural gas market in a period of abundant supplies, could become and remain oversupplied.
"It is advantageous that natural gas is an environment-friendly and balancing fuel. However considering a global recession, I believe the real challenge in the natural gas markets will stem from the breakdown in global economical conditions," he concluded.
- Natural gas usage to continue to expand
EastWest Institute Senior Fellow Danila Bochkarev also said that along with renewable energy, the use of natural gas would incrementally increase up to 2040, as renewable energy sources alone would not be sufficient to meet growing demand.
According to Bochkarev, pricing will not be the biggest challenge in natural gas markets, but rather regulations and taxation.
"Gas is currently being sold at very competitive prices. There are differences from country to country but gas producing countries now understand that natural gas should be competitively priced," he said.
- Turkey prepares to become gas hub
Speaking on the role of natural gas in Turkey's energy market, the Chair of Turkish Natural Gas Distributors Association (GAZBIR) Yasar Arslan stressed the importance of Turkey becoming a gas hub as soon as possible, which he said would be possible with the help of Russia.
"We import nearly 50-60% of our natural gas from Russia. At this point, I predict that we will show the expected development in the Balkans and Europe through the creation of a hub with the support of Russia in a few years," he declared.
While acknowledging that Turkey is the fourth largest market in Europe in terms of gas consumption, Arslan noted that Turkey is also building its infrastructure to lay the ground for the country to become a natural gas hub.
"In the coming three to four years, Turkey will have the opportunity to store 20% of its gas, provide enough LNG gasification capacity to meet domestic demand, and therefore become a market where prices can be set," he explained.
Arslan added that considering that some of Turkey's gas contracts will end in 2021, GAZBIR affirms that a new pricing mechanism is needed, which could be agreed with Russia, the country that Turkey imports the most gas from.
- Liberalization of Turkey's gas market needed
Arif Akturk, board member of Esgaz & Izmir Natural Gas, said that uncertainty in gas prices is a huge burden for Turkey's natural gas market as the country consumes 50 billion cubic meters of gas per year.
"Prices are uncertain and nobody knows what they will be in December or January. We need to create a liberal market in Turkey. The current gas market is too strict for the system here," he said.
"We need to get rid of all the licenses and permits so that everybody [including the private sector] can import gas in line with the current conditions - this is our expectation," he added.
Reporting by Nuran Erkul Kaya, Murat Temizer, Firdevs Yuksel
Writing by Ebru Sengul