20 Mar

  • By herdem
  • In Energy
  • Comments Off

Currently, the importance of the Liguefied Natural Gas (“LNG”) has come to the fore with the discussions concerning the probable problems in natural gas import to the Europe due to the Crimean Crisis. According to the experts’ opinion, the LNG import to the Europe may increase in the near future depending on the decrease of the natural gas import. In brief, the LNG plays an essential role as an energy resource.

LNG import in Turkey

LNG import has been enabled in Turkey within the frame of the amendment on the Natural Gas Law in 2008. As is known, the LNG is regarded as an alternative energy resource to the natural gas and provides advantages such as its harmfulness to the environment and ease of its handling and storage. LNG import has been regulated as a market activity by the Natural Gas Market License Regulation and Natural Gas Market Law. Accordingly, the import, storage and trade of the LNG is subject to specific licenses and permits. Pursuant to the Natural Gas Market Law, these market activities may be operated by private sector companies within the scope of opening of the natural gas market to competition. License application processes have been set forth by the Natural Gas Market License Regulation.

Turkey supplies its LNG mainly from Nigeria and Algeria. According to the statistics of the Energy Market Regulatory Authority (“EMRA”), 7.862 million cubic meter of LNG have been imported in 2012 which corresponds to 17 % of the total natural gas import of Turkey. Even if the natural gas market has been opened to the competition, LNG import activities have been operated by BOTAŞ to a large extent.

Why operate in LNG sector?: LNG incentives

There are several facilities for LNG license applications provided by the recent Natural Gas Market Law. For example, the license application evaluation process takes 30 days for LNG import license applications whereas this term has been regulated for natural gas import license applications as 60 days. Moreover, the spot LNG import has also been supported with increase of license requirements. Pursuant to the Natural Gas Market Law and License Regulation, storage capacities, information and guarantee regarding the imported natural gas, capacity to contribute to the national transmission system are not required for spot LNG import license applications and spot LNG import license provides the possibility to the license owners operate with one license in more than one import grids.

Not only above mentioned facilities, but there have also been financial incentives proposed about LNG plants in 2013 in order to increase the LNG investments in Turkey. In the event that these incentives are regulated by the New Natural Gas Market Law, the LNG storage facility investor will be entitled to obtain LNG from this facility as much as he/she needs, the investors may benefit from the financial incentives and these investors may determine the tariffs of usage of the LNG plants by third parties. Currently, these incentives have not come to the fore yet and they are regarded as a proposal.

Incorporation of an LNG company in Turkey

It is possible that foreigners set up a company in Turkey independent of their nationality and the company type planned to be established. Anyone who intends to operate in LNG market shall consider the specific requirements which have been stated in the natural gas laws and regulations such as the terms which shall be regulated in the articles of association, the minimum capital amounts which have been determined for each market activity.

Herdem Law Firm, Istanbul Turkey

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