Gas futures market will enable market participants to minimize their risks, EXIST chairman says

Turkey will launch a natural gas futures market on Oct. 1 under Turkey’s energy exchange, EXIST, marking a new milestone for the country’s natural gas sector.

The Natural Gas Futures Market (NFM) will enable market participants to predict prices and minimize risks against price fluctuations, Turkey’s Deputy Energy and Natural Resources Minister and Chairman of EXIST Abdullah Tancan, told Anadolu Agency in an exclusive interview.

‘When futures contracts applications start in the NFM, market participants will be able to manage their portfolios in the longer term but flexibly. Participants will be able to clarify their sale prices in advance under monthly, quarterly and yearly contracts,’ he explained.

Tancan expects more competitive reference prices for customers when the trading volume on the NFM increases, minimizing future risks while contributing to supply security.

In an interview with Anadolu Agency in June this year, Mustafa Yilmaz, head of Turkey’s Energy and Market Regulatory Authority (EMRA) said Turkey’s gas discovery of 540 billion cubic meters with a market value over $100 billion could be open for trading under the name ‘Black Sea Gas Contract’ in the natural gas futures market.

Tancan also echoed the possibility of trading Black Sea gas on the NFM, the first production of which is planned for 2023.

Initially, a volume of between 3 and 5 billion cubic meters is planned for production per year from the Black Sea by 2023. However, this could increase to between 15 and 20 billion cubic meters annually to reduce Turkey’s gas imports by around 30%.

‘Turkey’s natural gas market, with its diversified sources and production in the Black Sea, will enable the creation of a competitive reference price. We see the opening of the NFM as a milestone for our country in bringing us closer to the aim of becoming a gas trading hub,’ the EXIST chairman said.

Turkey, as a highly import-dependent natural gas consumer, consumed 47.7 billion cubic meters of natural gas in 2020.

However, consumption this year is expected to increase significantly because of further use of natural gas for electricity generation due to lower output from hydropower plants as a result of drought.

Overall natural gas consumption is estimated to reach 60 billion cubic meters throughout this year.

 Source: Anadolu Agency