OAO Gazprom, the world's biggest natural-gas provider, may bid for the Turkish capital's gas grid in a sale that could fetch as much as $3 billion. Bosphorus Gaz Corp., owned by Gazprom and Turkey's Tur Enerji, is interested in buying the Ankara grid and other Turkish networks to be sold in the future, Tugrul Erkin, the Turkish unit's general coordinator, said in an interview Thursday.
Moscow-based Gazprom, which is controlled by the Russian government, wants to expand into markets outside Russia to boost revenue from retail sales. Turkey is selling its state-owned energy assets to reduce the role of the government in the economy and boost revenue under a $10 billion International Monetary Fund (IMF) anti- inflation pact.
"We are considering entering the auction with our partner Gazprom,'' said Erkin, who declined to say what price the Ankara gas company could attract. The company, Başkent Doğal Gaz, owns a 30-year license to distribute gas in the capital. Bosphorus may also bid for Istanbul's gas distribution network, which the government promised to sell, Erkin said.
Ankara Mayor Melih Gokcek said last month the city's natural-gas grid could be worth as much as $3 billion, allowing the capital to pay off its $850 million debt to state pipeline monopoly Botas and fund transport and water projects.
Doubling Consumption
Natural-gas consumption among Ankara's 4 million people is expected to more than double to 7.5 billion cubic meters a year in the next decade from 3 billion cubic meters, Gokcek said. Separately, Istanbul-based Bosphorus expects to begin selling gas it will buy directly from Gazprom to customers by the end of this year, Erkin said. The sales will mark the first time a non-state company enters the wholesale gas market in Turkey after Botaş earlier this year auctioned off four licenses.
Bosphorus won a contract from Botas to buy an annual 750 million cubic meters of the 30 billion cubic meters of gas Turkey imports each year. Three other companies given licenses this year were a Royal Dutch Shell Plc unit, local fuel retailer Turcas and Enerco.
The licenses, good through 2020, allow Bosphorus and the others to import and distribute gas to electricity producers and other companies and are part of government efforts to increase competition in the energy market. Bosphorus has secured three major customers, including power producers and factories that Erkin wouldn't identify. He added Gazprom wouldn't lower the price it charges wholesalers for its unit.
Bosphorus targets a 20 percent share of the Turkish wholesale gas market once Botas sells the rest of the licenses, Erkin said. Eventually, Botas must lower its own market share to 20 percent, selling the rest of its contracts to non-state distributors. Bosphorus and the other startup wholesalers expect to sell gas for less than Botas to win over customers, which will depress earnings, Erkin said.
(Bloomberg)