Turkey’s gas incumbent BOTAS prepares for landmark unbundling

The Turkish oil and gas incumbent BOTAS is expected to be unbundled, more than a decade after the primary legislation stipulating the divestment was adopted.

Under proposals seen by ICIS and likely to be debated and adopted before the end of the year, the vertically integrated company is expected to be split into four entities.

These will include:

• Natural Gas Trade Joint Stock Company,
• Natural Gas Infrastructure Joint Stock Company,
• BOTAS International A.Ş. (an existing company)
• BOTAS

According to the restructuring plan, the department which currently handles imports will continue to handle import activities apart from spot trading.

However, this department will be barred from signing new import agreements or extend the terms of existing import contracts. It is expected that this entity would handle existing import contracts such as those currently held with Algeria, Azerbaijan (for the TANAP Shah Deniz II imports) Iran, or the Russian Blue Stream contracts. These are expected to expire over the upcoming decade.

BOTAS is expected to transfer, possibly sell, imported volumes to the natural gas trade company which will be responsible for internal wholesale trading and exports, if relevant.

The natural gas infrastructure company will acquire the transmission, storage and infrastructure operations. This entity will perform natural gas transmission and storage activities as a unified system operator and consider security of supply and infrastructure needs.

It is possible that the entity will also be responsible for regasification activities at LNG terminals or for gasifying lignite and injecting it into the transmission system.

BOTAS International will acquire petroleum transmission and transportation activities.

As the draft law states that the share capitals of natural gas trade company and infrastructure company will be contributed by BOTAS, BOTAS is initially envisaged as the only shareholder in such companies, ICIS understands.

BOTAS will sign transfer agreements with each of these three companies separately, regulating transfer of all related assets and liabilities, including relevant licenses to the related company.

The draft law also envisages the decrease of the internal market share of the natural gas trade company to 50% of the national consumption at the end of the five year-period after the draft law enters into force.

The unbundling of Botas and the reduction of its market share has been first mooted in the natural gas market law 4646 published in 2000.

The law underwent subsequent amendments, including in 2009 when the unbundling issue was reiterated but not implemented.

The latest proposals are expected to be discussed once the parliament reconvenes on 1 October after the summer recess.