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Turkish unit of France's Engie confirms Malkoclar gas import plans - S&P Global

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Highlights

Gas will be supplied to Engie's own Turkish user portfolio from Dec. 1

No decision taken yet on future purchases

Malkoclar is entry point to Turkey on border with Bulgaria

Istanbul — A Turkish subsidiary of France's Engie has confirmed to S&P Global Platts that it has reserved 23,000 cu m/d of spot gas import pipeline capacity at Turkey's Malkoclar entry point, and that it expects flow to start from Dec 1.

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It will be the first spot gas imported to Turkey by pipeline and -- according to data from European transmission systems operator body Entsog -- the first gas to flow between Bulgaria and Turkey since early January.

An official from Engie Enerji Ticaret v Pazarlama AS said the company had booked capacity to import spot gas into Turkey through Malkoclar on the Bulgaria-Turkey border and that although bureaucratic processes were still ongoing he expected flow to start on time.

The move follows a spot capacity auction held by Turkish energy regulator EPDK on Nov. 24, in which Engie Enerji was the sole entrant, and an announcement by Gazprom on Nov. 11 that it had made a sale of 715,000 cu m of gas on its Electronic Sales Platform (ESP) to be delivered to Turkey via Malkoclar in December.

The official declined to confirm that Engie or its affiliates had bought the gas, citing confidentiality, but pointed out that the volume sold and the volume to be imported into Turkey match.

He added that at present, Engie has not taken any decision over possible future imports via Malkoclar.

There have been no subsequent ESP sales for delivery to Malkoclar as of Nov. 24, Gazprom Export data show.

Engie portfolio

Engie Enerji was granted a spot gas import license by the EPDK on Oct. 27, running to Oct. 27, 2030.

Engie has a number of subsidiaries in Turkey operating in power generation, distribution, as well as power plant design, maintenance and operation.

It holds a 95% stake in the 770 MW Bayima CCGT plant near the Turkish capital Ankara, and one third of the equity in the 480 MW Unimar CCGT in Tekirdag, around 160 km from Malkoclar.

It also holds a 90% stake in Izgaz, the regional gas distribution company in Kocaeli/Izmit, just to the east of Istanbul.

Izgaz has 361,000 subscribers and distributes around 2.3 Bcm of gas annually.

EPDK has been advertising regular quarterly and monthly auctions of spot capacity for Malkoclar since late 2019 ahead of the commissioning of Gazprom's TurkStream pipeline on Jan. 1, with Engie Enerji the first company either to register to take part in the auctions or to book capacity.

Although no party involved in the process has confirmed as such, the small volume involved and the fact that Engie is the first company to attempt to make spot imports via Malkoclar suggests that the move is aimed primarily at testing Turkey's spot import legislation and regulations to confirm whether it is possible to make spot pipeline imports and to identify any potential snags.

EPDK began issuing spot LNG import licenses in 2008 and despite 34 licenses being issued to date, almost all of the spot LNG imported into Turkey has been imported by state gas importer Botas, with occasional cargoes imported by private company Ege Gaz, which operates Turkey's second onshore LNG import terminal at Aliaga.

EPDK late last year amended its regulations to allow spot gas imports by pipeline and converted all of the spot LNG import licenses to also allow spot pipeline imports.

Since September 2019 a further 18 spot gas import licenses have been issued.

Interconnection agreement

The move to import spot gas to Turkey from Bulgaria comes as Botas has been involved in modifying the compressor station serving the Malkoclar entry point to allow bi-directional flow, and hence the export of gas from Turkey, into Bulgaria and on to other European markets.

A contract for the conversion was signed with work scheduled to begin on July 29 and to be completed by Oct. 12 but to date neither Botas nor Turkey's energy ministry has confirmed whether the work has been completed.

Bulgaria's deputy energy minister Zhecho Stankov said Nov. 23 that he expected the interconnection agreement needed to allow gas to flow from Turkey to Bulgaria to be signed "in the near future."

The anticipated agreement is expected to allow the transit and trading and of both physical and virtual gas, in effect allowing simultaneous sales in both directions with only the physical difference in volumes being moved.

Turkish energy ministry officials have not responded to queries from Platts as to when the interconnection agreement is expected to be signed.

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