Turkey issues gas cut waiver, sectors warn of hit amid power outage

Turkey exempted enterprises and facilities producing crucial products from the order to cut gas use after Iran announced a temporary halt in natural gas exports, while industrialists warned production would be seriously disrupted as they braced for related power outages.

The main electricity distribution company TEIAŞ said it would impose three days of power outages through Wednesday in the country’s organized industrial zones due to the shortages of gas.TEIAŞ said it verbally informed zone managers over the weekend.

A major supplier to Turkey, Iran last Thursday cut gas flows due to a halt that was said to last for up to 10 days due to technical failures, prompting Turkish authorities to order gas-fueled power plants to cut gas use by 40%.

The country’s natural gas distributors were asked to reduce supply to 60% for large consumers except for gas used for heating.

Iran said its gas exports to Turkey had resumed on Friday but a Turkish official told Reuters those supplies were way lower than the required volumes.

Turkey has denied that the problem was due to a fault at a pressure station on its side and sent a delegation to Tehran.

Industry and Technology Minister Mustafa Varank and Energy and Natural Resources Minister Fatih Dönmez on Monday met with industrialists to discuss the disruptions.

Talks with Iran underway

Dönmez said talks with Iran were underway and that a delegation led by a deputy minister was sent to Tehran. He also stressed all of the natural gas entry points, except for Iran, were working at full capacity.

“We see that Iran is currently unable to meet the standards related to the flow determined in its contract. They told in a written statement that they had detected a gas leak at a station on their side. We sent our teams there for on-site detection,” the minister said.

“Our approach was that the repair works be done after overcoming the winter conditions, but they said they could not take this risk.”

Addressing the virtual meeting, Varank stressed support for the industrialists and said “we will overcome this period altogether.”

Varank said there would be short-term production losses and stressed both ministries were trying to plan the process effectively.

But he also emphasized that there were priorities such as ensuring machine equipment is not damaged and solving problems regarding raw material losses.

Turkey’s state pipeline operator Petroleum Pipeline Corporation (BOTAŞ) said on Monday enterprises producing medicine, meat and milk products were being exempted from the order to cut gas use, according to media reports, citing e-mails sent to producers.

BOTAŞ cited difficulties in the supply-demand balance due to an increase in gas use caused by seasonal conditions and the interruption of the natural gas supplied by foreign suppliers.

More than half of Turkey’s electricity is produced in gas-powered plants and automakers particularly warned that output halts due to power outages could have a significant cost.

Loss of up to $1 billion

Some companies, particularly automakers, have already announced production halts.

Tofaş, a joint venture of Turkey’s Koç Holding and Italy’s Fiat Chrysler, said it would suspend output at its factory in the northwestern Bursa province for three days starting Monday due to the power cut.

Other companies were to hold meetings Monday to evaluate potential production halts.

The Turkish-French joint venture Oyak Renault announced it will stop production at its Bursa plant for 15 days, as the outages compound the global chip shortage already gripping the automotive industry.

Championing Turkey’s exports for years, the automotive industry had exported nearly $30 billion (TL 402 billion) worth of products in 2021, accounting for some 11% of the overall foreign sales in the year.

Automotive Suppliers Association of Turkey (TAYSAD) Chairperson Albert Saydam expressed concerns and stressed the enormous cost of the unexpected disruptions.

“When we consider the entire ecosystem, including exports of $30 billion, the domestic market of $40 billion and services and the dealers, the three-day production cease means a loss of $1 billion in the simplest terms,” Saydam was cited as telling the business daily Dünya.

Some listed manufacturers also announced temporary production suspension due to the power and gas cuts.

Defense and automotive parts maker Katmerciler on Sunday said it will halt production during the electricity cut but that it did not expect the planned cut to impact business, without elaborating. Kütahya Porselen also said its output would fall due to the fuel cutback.

In a Public Disclosure Platform (KAP) filling, cardboard maker Kartonsan said it would temporarily halt production due to the shortage in the gas supply, while car parts maker Ege Endüstri also noted it would cut output due to the power outage.


Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button