Turkiye’s BOTAS takes steps to become domestic monopoly supplier of Russian gas

Turkish gas companies have raised concerns about moves by the gas incumbent BOTAŞ to become a monopoly supplier of Russian gas internally and to Europe.

Multiple sources said the state company was consolidating its market position paying large margins for Russian gas at a time when it is preparing to work with Bulgarian counterpart Bulgargaz to supply volumes to Europe.

Three separate sources suggest BOTAS is buying 1bcm of gas from independent Turkish importer Kibar Enerji this year. It is thought to have bought the same amount in 2022.

Last year BOTAS also bought 1.5bcm from another independent importer, Akfel Gaz, but this year it increased purchases to 2.21bcm/year from Akfel Gaz, which is almost the same amount contracted by this company per year from Gazprom until 2043.

The independent companies reportedly entered a deal with BOTAS after being ordered to pay a multi-million dollar arbitration award to Russia’s Gazprom. Difficult market conditions meant they struggled to pay the award in 2021. A scheme was put in place in 2022 whereby BOTAS would buy the volumes from independent importers at a margin, helping them to pay off the arbitration.

The contract, seen by ICIS, shows that BOTAS pays a $38 per 1,000 cubic metres (€3.30/MWh) margin for volumes bought from Akfel Gaz,a company which was nationalised in 2016 and is now managed by caretaker TMSF.

The same sources said BOTAS is also looking to buy an additional 3bcm on the spot market in addition to 21.75bcm/year contracted on a medium- or long-term basis.

BOTAS’s moves to consolidate its position in the market raise concerns on three accounts, sources say.


Firstly, they say that even considering the fact BOTAS is helping independent importers to pay off the Gazprom arbitration award, the margin is high compared to prices paid in previous years and it is very unusual for a public company to help private companies,”

“In the EU or UK if you get a €0.5-€1.00/MWh margin you are very happy,” one market source said.

A second source close to discussions said that no such scheme had ever been applied in the past.

Akfel Gaz and Kibar Enerji did not reply to questions from ICIS.

The payments are made at a time when BOTAS’s borrowing needs for 2023 have been estimated at Turkish lira 423bn ($21bn), according to government reports published at the end of last year.

BOTAS did not reply to ICIS questions but one of the sources active in the market said BOTAS may be in a more healthy financial situation, having secured loans.


Secondly, sources have also pointed out that BOTAS concluded the gas purchase contract with Akfel Gaz in May 2022, three months after the company was sold to a company the shareholding structure of which was linked to a subsidiary of Cengiz Holding, one of Turkiye’s largest conglomerates, Gefest Corporation LLC, a Russia-headquartered company and a friend of the Turkish president’s son, Halil Ibrahim Bacacı. The asset transfer collapsed in August 2022 as ICIS published an investigation into the shareholding structure of the buyers.


Thirdly, sources in Turkiye are concerned that by gaining a monopoly position, BOTAS will put an end to the remaining free market arrangements in the gas sector after 23 years of unfruitful attempts to liberalise. Up until 2016, the importers of Russian gas included BOTAS as well as independents Akfel Gaz, Avrasya Gaz, Bati Hatti, Bosphorus Gaz, Enerco Enerji, Kibar Enerji and Shell Enerji.

However, following the nationalisation of the Akfel Commodities Turkiye group, which included Akfel Gaz, Enerco Enerji and Avrasya Gaz, a Gazprom arbitration and the deteriorating Turkish economy, only Akfel Gaz and Kibar Enerji have been importing Russian volumes consistently.

By snapping up the volumes imported by Akfel Gaz and Kibar Enerji, BOTAS now gains control over Russian gas imports.


Furthermore, sources say that with many of the independent importers out of the market, a recent BOTAS deal with Bulgarian incumbent Bulgargaz will preclude any local and regional companies from accessing imports via Turkiye.

BOTAS and Bulgargaz signed a 13-year agreement to allow the latter access to the Turkish grid and import terminals for offtakes of 1.5bcm/year. This follows news that Turkiye is working with Russia to establish a hub for onward gas sales to Europe from Turkiye.

ICIS revealed earlier this month that the European Federation of Energy Traders (EFET) sent a letter to the European Commission and Bulgarian stakeholders warning of the effects of the deal and the possibility that third parties would be barred from taking part.



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