Turkey to become energy hub by pricing gas on spot mkt.
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Turkey can become a true energy hub by pricing natural gas on the spot market, Dr. Volkan Ozdemir, head of the Institute for Energy Markets and Policies, EPPEN, told Anadolu Agency.
Noting that Turkey is buying natural gas from Azerbaijan, Russia and Iran at the moment, Ozdemir said northern Iraqi and eastern Mediterranean gas can also be included with those who transit gas to Europe in the near future.
“If Turkey wants to truly become an energy hub, it has to become a financial center where the price of natural gas is determined on spot markets,” he explained.
Stating that natural gas prices are less indexed to oil prices, Ozdemir stressed Turkey is drifting away from European gas markets.
“In Europe, around 55 percent of natural gas prices are determined on spot markets by supply and demand balance, while the remaining 45 percent of prices are indexed to prices of oil, petroleum products, and long-term contracts. In the U.S., it is the same. Their natural gas is priced at Henry Hub,” he added.
The Henry Hub price indexation is used as a pricing point for natural gas in the U.S.’ state of Louisiana. Here gas pipelines also physically merge and serve as a distribution point, while the price of gas is determined by supply and demand balance in the market.
“Instead of just being a transit country for natural gas deliveries from the east to the west, Turkey can host a commercial gas market, where supply and demand meet and price is formed,” Ozdemir emphasized