An analysis of the natural gas pricing in natural gas hubs: an evaluation for Turkey

Abstract

Natural gas is a worldwide commodity traded among regions. Regulated or unregulated natural gas markets are in a new process phase leading to a critical change in the market structure and organization while demand grows. Moreover, international trade of high gas volumes and complexity of transportation alternatives create new difficulties in market modeling and price forecasting. Hence, there is a need to define and analyze the future of recently developing gas markets. Turkey has an important geopolitical position with short distances to the regions of the largest natural gas reserves. While largely dependent on the gas import from Russia, Iran and Azerbaijan through pipelines, it is also very close to high demanding countries. That is why Turkey may have the opportunity to play an important role in pricing gas between international market players and becoming a market maker. This paper aims to underline the importance of hub pricing through structuring a virtual gas trade hub in Turkey.