Turkish Natural Gas Market
Introduction
Turkish natural gas market sees different types of economic activities for almost over 60 years, since Turkish Petroleum Corporation was founded in 1954. It contains a variety of economic categories, such as production, import, export, storage, consumption, and distribution. Since the beginning of 2020, a global pandemic has changed in various and unforeseen ways of economic principles and cast a shadow on actionable insights that were considered straightforward in the previous years. Now, we have to take a much closer look at our data to generate rigid results that can be considered safe-for-action. We tried to keep an open mind about the results we found that could be caused by unknown effects, but also did our best to come up with a simple explanation for each graph you can find below. Two simple things need further clarification before moving forward with the analysis:
Gas Reference Price (TL/1000 Sm³): Shows the overall average value of gas prices between two 8 AM’s. Total Trade Volume (TL): Shows the total amount of price of daily and weekly contracts.
Key Takeaways
This report shares some insights about Natural Gas Market in Turkey and you may find our results below.
Our main goal is to express current values and changes in both datasets which include Gas Reference Prices and Total Trade Volumes for the years 2018, 2019, 2020, and 2021.
In our previous release notes, we have explained our data gathering, cleaning and processing procedures in detail. Even though, the datasets we have used were fairly structured we still needed some effort into them. For more detailed information check out our Pre-processing phase here or the Exploratory Data Analysis report here.
We visualized values of Gas Reference Price and Total Trade Volume of years 2018, 2019, 2020, and 2021 as well as their average and change depending on different time periods.
We also analyzed some critical points that carry anomalies such as daily and monthly maximums and minimums.
Preparation and Exploration of the Data
We have obtained both of our datasets from EPIAS’ Transparency Platform (https://seffaflik.epias.com.tr/transparency/). Raw data consists of 1188 observations of 8 variables.
Objectives of this part of the project are as follows:
Cleaning dirty data and analyzing.
Processing columns to achieve homogeneous data format and numbers. Visualizing the data in order to express overview information.
Creating different time periods.
Pre-processing the Data
For this report, we will include the code for pre-processing phase below. However, the whole pre-processing phase is explained in detail on the pre-processing the data page click here for more details.
Initial Gas Reference Price Data
Previously, gas reference price data included the wrong data format and number separators. We have fixed all the issues considering that we need clean and properly formatted data for our analysis.
Initial Total Trade Volume Data
As well as gas reference price data, total trade volume also carried out some problems that we need to fix. That as well is done in our pre-processing phase.
Final Natural Gas RDS
Finally, as seen below we have obtained clean and ready-to-analyze data and saved it as a .rds file. That helped us a lot when we are conducting our exploratory data analysis and final analysis.
Overview of Natural Gas Data RDS
Visualization of Natural Gas Data
Even though this is just a simple overlook, the daily gas reference prices plot shows us how prices were stable in the first years then suddenly started to rise in the last quarter of 2021. The Red line, the average of our whole data, has shifted up so suddenly that left all the prices in the last years under it.
The daily total trade volume plot clearly shows us it is much more volatile than gas reference price data.
Final Analysis
Our first output is the weekly percentage change in our Gas Reference Prices throughout 3 years. When we look at our data on weekly basis, we can see that throughout a year prices mostly change as expected and lines fit each other.
However, starting from the 36th week of 2021 our line chart greatly deviates from the previous years. According to to the article (https://www.cnbc.com/2021/10/08/natural-gas-prices-are-skyrocketing-globally-what-it-means-for-the-us.html), prices are rising due to the decrease in Europe’s gas production over the last two decades and the increase in demand as economies get back to business and consumers return to pre-pandemic activities.
Not all of this news happened in one week instead they were accumulating over the summer. But there was one thing that happened in only a week. That was a decrease in the country’s political interest rate which ultimately led to a decrease in the Turkish Lira’s valuation. As seen in the graph starting from September 2021 percentage change in prices did not decrease once.
The global market may get to an equilibrium point considering supply and demand in our next analysis we will see if these sudden price changes affected the total trade volume, demand.
As seen below, the demand for natural gas did not increase until the 38th week of 2021. Therefore, we can not conclude that prices have risen due to high trade volume or demand. Total trade volume was fairly in line with the previous year until week 44 which is the beginning of November.
We also analyzed the monthly change in both Gas Reference Price (GRP) and Total Trade Volume (TTV). According to this analysis;
The 3 highest changes in GRP in terms of months are in October, November, and December. On the other hand, the highest change in GRP in terms of years is in 2021.
The 3 highest changes in TTV in terms of months are in February, June, and October. On the other hand, the highest change in TTV in terms of years is in 2021.
Our next output can be classified as more of a breakdown comparison of our dataset. One of the most important outcome shows itself when we look at the graph below.
It shows a significant raise in average gas prices in the year 2021 when compared to other years. This has been the result of many things, according to different sources, but one reason stands out in every article online, which mentions Gazprom’s suspicious behaviour which can be understood as market manipulation (https://www.reuters.com/business/energy/group-eu-lawmakers-seeks-probe-gazproms-role-gas-price-surge-2021-09-17/).
If we look at the total trade volume averages we see a somewhat different picture. Notice that even though the prices were about the same for 2018 till 2020, 2019 had the lowest trade volume values. This is particularly interesting where when we compare it to the high prices of 2020, which we actually expect it to be lower than others.
Conclusion
- We can clearly see a rise in gas reference prices in 2021 when compared to other years. This can be related to the fact that Gazprom’s alleged market manipulation, decrease in Turkish Lira’s value, and as well as other side factors. On the other hand, total trade volume behaves almost the same way we expect it to be, except in certain time periods, we can see that it is lower or higher than previous values. Overall we can conclude that the demand for natural gas did not have a drastic change to affect the global market prices.
- Monthly and weekly aggregation graphs show us that November and October in 2021 have the highest gas reference prices and total trade volume averages respectively.
- The fall season unexpectedly has the highest gas price and trade volume averages. On the other hand, winter actually has the lowest averages.
- Even though there is no significant change in average gas prices between each weekday, trade volume averages change over weekdays. This also may be depending on the demanding company’s policy.
References