BOTAS concerned about permission for natural gas import

Dec 15, 2006 01:00 AM

State owned Turkish Pipeline Company BOTAS, which has been accused of buying natural gas at a high price with long-term agreements with exporting countries, is concerned about the possible permission for natural gas import.
According to the company’s supply and demand plan the natural gas agreement will not have to be renewed, but natural gas import will be permitted if the bill to modify Natural Gas Market Law passes.

This could put BOTAS, which had made “take or pay” agreements, into trouble. A company official states permitting natural gas import may have drawbacks since there are agreements guaranteed by the treasury.
The current law bans import from exporting countries BOTAS had made agreements with and states the Energy Market Regulatory Board (EPDK) must determine a need for importation. Turkey’s Energy Ministry is planning to issue complete permission to import with the change in the Natural Gas Market Law.

Requirements in the current law such as getting an import authorization, specifying the import source and stocking will be annulled and replaced by the Energy Market Regulatory Board’s approval of the importing company’s financial competence. The current law charges BOTAS with making a supply-demand plan by taking natural gas contracts into consideration but the change would end this practice also.
Company officials state the efforts to transfer BOTAS’s natural gas purchasing agreements to the private sector contradict the plan to permit imports. A BOTAS official pointed to purchasing agreements guaranteed by the treasury and claimed that ignoring current agreements and permitting import would cause a great loss for the treasury.

The private sector in Turkey is also against permitting imports. The Natural Gas Importers and Exporters’ Union Association, an umbrella organization for the industry, asks the agreements of the public sector to be transferred to the private sector as required by the Natural Gas Market Law.
Authorities from the association point out BOTAS’s natural gas transfer bid process is almost complete and believe other contracts will be concluded more rapidly once the process is successfully completed. The public sector must get rid of heavy agreements guaranteed by the treasury, which is possible with the transfer of the contract. Companies that win the bid will also undertake all liabilities of the contracts they take over.

BOTAS is also required to gradually transfer its contracts to the private sector by 2009 until its market share declines to 20 %, the law says. In November 2005, BOTAS invited private companies to bid for a contract.
For the transfer of an agreement of natural gas received from Russia with the western pipeline (Turusgaz), Shell offered $ 2.01 mm for a lot, Bosphorus Gaz offered $ 1.8 bn per lot for three lots, Enerco offered $ 1.6 mm per lot for 10 lots and Avrasya Gaz offered $ 910,000 per lot for five lots.

As BOTAS aimed at transferring its 16 bn cm counter in the first tender, it formed 64 lots and set the condition to offer at least $ 500,000 for each lot.
In the conclusion part of the tender’s declaration, BOTAS asked the companies to raise their offers to the level of that of Shell, the highest offer with $ 2.01 mm. The proposal was welcomed by the companies. The process on the transfer bid continues.

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