Natural Gas Distribution SectorReport 2017

www.gazbir.org.tr

Investments

1

As of the end of 2017, within the natural gas distribution sector, 72 natural gas distribution companies made networkinvestments of 21.5 billion TL in total. Thanks to the investments, Turkey’s natural gas distribution network has extended to130.585 km and the length of the network has increased by 12% compared to 2016.

2017 TOTAL

STEEL PIPELINE 1.040 KM 11.800 KM

POLYETHYLENE (PE) PIPELINE

6.500 KM 80.130 KM

SERVICE PIPELINE 4.238 KM 38.655 KM

TOTAL 11.778 KM 130.585 KM 10

50

With the 2017 network investments,there was a growth of 10%in the distribution network.

In 2017, the distribution companies made network investments at the amount of1.75 billion Turkish Liras. Thanks to these investments, a total of 11.778-km networkwas built in 2017. The number of service pipelines rose to 3.307.520 with an increaseof 245.571 in the previous year.

%

Investments

2

The length of network in total increased by 42.2% compared to 2013 due to the investments of38.846 km in total made in the last 4 years. 30% of the network investments in question weremade in 2017. Between 2014-2017 while the minimum network investment was made in 2014,the maximum network investment was made in 2017.

2013 2014 2015 2016 2017

140

120

100

80

60

16

14

12

10

8

In the last 4-year period when the network investments increased, there was an increase, too,in the number of subscribers and of districts where natural gas supplies are provided. In the last4 years, the number of subscribers increased by 44% and the number of districts where naturalgas is provided increased by 48%.

Total Network Length and Growth Rate

91.739 KM

2013 Network Length

In 2014, a network investment of 7.324 KM

was made.

In 2015, the network grew by 9.8%.

In 2016, a network investment of 9.145 KM

was made.

Due to the investment of 11.778 km in 2017, the

network grew by 10.1%.

99.063 KM

109.662 KM

118.807 KM

130.585 KM

2014

2015

2016

2017

Network Length-Thousand KM

Million-Number of Subscribers

Total Network Length

Number of Subscribers

In the last 4-year period, with the investments, the network length –

supply – number of subscribers

increased in parallel. (Between %40- %50)

Due to the investments in 2017, the Subscribers – Active

Users and the Network increased by 9-10%.

Network: %10,1Number of Subscribers: %9

Active Subscribers: %9,7

Total Network Length

Expansions

3

While 210 districts were provided with natural gas in the last 10 years, in 2017, 101 districts and towns were provided with naturalgas. As of the end of 2017, 78 provinces and 426 districts and towns use natural gas in Turkey.

100

80

60

40

20

0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

38 36 24 22 19 10 22 8 8 28 101

Number of Districts Provided with Supply Between 2007-2017While the annual averagenumber of districts in Turkeywhich were provided withnatural gas was 21 in the last10 year period, the number ofdistricts and towns increased4,5 times in 2017.

The average annual number of districts provided with natural gas supply in Turkey (21)

In 2017, approximately 500 million TL was invested in the districts and towns within the scope of the expansions. Due to thisinvestment, natural gas distribution network reached to new 2.3 million citizens. In the agenda of 2018 expansion investments,there are 98 districts and towns. In 2018, the investments are projected to be in the amount of approximately 700 million TL, andthe number of citizens that the distribution network will reach is estimated to increase by 2,5 million, reaching to a total of 64.5million persons.

When the expansion investments are completed, 81 provinces and 554 districts and towns in Turkey will use natural gas.

98 30

2018 2019 Target

Expansions

4

District Based Natural Gas Supply Map

Provided with NaturalGas (325)

Provided with Natural Gas in 2017 (101)

To be Provided with Natural Gas 2018-2019(128) 4

Number of Subscribers

5

As of the end of 2017, the number of natural gas total subscribers in total reached to 14.162.930. The number of subscribersincreased to 13.610.325 and of eligible consumer rose to 552.605. In 2017, 1.162.691 new subscribers were included to Turkey’snatural gas distribution system.

2013 2014 2015 2016 2017

16.000.000

14.000.000

12.000.000

10.000.000

8.000.000

6.000.000

4.000.000

2.000.000

0

Number of Subscribers Between 2013-2017

9.856.324 11.198.821 12.119.612 14.162.93013.000.672

The difference in the number of

Subscribers Between 2013-2017:4.306.606

Growth:44 %

The number of eligible consumers

increased by 33% in the last 5 years.

Subscriber

Eligible Consumer

While there was about 677.181 inclusion of subscriber between 2007-2017, in the last 4-year period, theinclusion was above the Turkey average. In 2017, 72% more than the Turkey average of subscribers wasincluded.

Number of Subscribers

6

The maximum number of subscribers in 2017 was the month of November during which182.252 (16% of inclusion in 2017) subscribers was included in the natural gasdistribution system. 33% of the subscribers was included in the first half of 2017 and theremaining 67% was included in the second half of the year. Istanbul, which is the provincewith the maximum number of new subscribers, is followed by Izmir and Bursa.yılında Türkiye’nin 76 ilinde doğal gaz dağıtım sistemine ortalama 14.821 yeni abone dahilolmuştur. 2016 yılı ile kıyaslandığında il bazlı ortalama abone alımı %31 artış göstermiştir.2017 yılında 57 ilde ortalamanın altında abone alımı gerçekleşirken, 19 ilde Türkiyeortalamasının üzerinde abone alımı gerçekleşmiştir.

9%

3%

5%

5%

6%

5%

6%

8%10%

15%

16%

12%

2017 Monthly Percentages of

Subscriber Inclusion2016

2017

10.227

14.821 Change

+%45

First 10 Provinces Maximum Subscriber Inclusion in 2017

İstanbul212.250

İzmir79.485

Bursa53.964

Ankara52.805

Gaziantep39.361

Kocaeli34.409

Konya34.281

Samsun25.443

Kayseri25.323

Tekirdağ23.364

Average of Province Based Subscriber

Inclusion

January

Feb.

March

April

May

June

July

AugustSeptember

October

November

December

Number of Subscribers

7

Heat Map of Province Based Subscriber Inclusion in 2017

212.250 16.000 10.000 6.000 919

Penetration

8

In 2017, the population of Turkey increased by 995.654 people (1.25%) to 80.810.525 compared to the previous year. As of the end of2017, 61.901.502 citizens accessed the natural gas distribution network through investments of distribution companies. The numberof citizens who accessed the distribution network increased by 2.394.246 (4%) compared to 2016. In 2017, the number of citizenswho had access to the distribution network but could not use the natural gas distribution service fell by 13.8% to 1.294.220. As of theend of 2017, the population using natural gas increased by 9.7% and reached to 49.607.282.

90.000.000

80.000.000

70.000.000

60.000.000

50.000.000

40.000.000

30.000.000

20.000.000

10.000.000

0 Population of

Turkey

Population reached by Natural Gas Distribution

Network

Population Using Natural Gas*

Population Using Natural Gas Actively

61

.90

1.5

02

59

.50

7.2

56

49

.60

7.2

82

45

.24

0.8

32

47

.96

2.6

50

43

.10

0.8

00

2016 2017

79

.81

4.8

71

80

.81

0.5

25

995.654 (%1,2)

2.394.246 (%4)

4.366.450 (%10) 4.861.850 (%11)

Population Using Natural Gas

increased by 14.6 Million (42%) in the

last 5 years.

Number of Persons not Using Natural

Gas Actively decreased by 14.6

million (37%) in 2017.

*Population Signing the Natural Gas Supply

Agreement

Consumption

9

In 2017, 53.3 billion m3 of natural gas was consumed inTurkey. Compared to 2016, the natural gas consumptionincreased by 16%. The reasons of this increase are;

%23%15 %72016

11.2312017

13.3012016

16.7302017

20.485

201614.095

201715.078

RESIDENTAL POWER PLANTS INDUSTRY

Transformation-Conversion

Residental

Service

Industry

Other

%39

%25

%28

%2

%6

2017 SectorialConsumptionPercentages

Residental PowerPlant

Industry Other Service

94% of the NG consumed in the Transformation-

Conversion Sector was consumed in Power

Plants..Sectorial Consumption Between 2011-2017

• The increase in the number of subscribers

• Colder temperature in the first 4 monthscompared to 2016

• The advantages of natural gas compared to otherenergy resources

Consumption

10

In 2017, the natural gas consumption in residences increased by 14.5% to 13.3 billion m3 compared to 2016. Thereasons for the increase of consumption in residences are the temperature below-normal season in the first 4months of the year and the increase in the number of residential subscribers. The increase mostly occurred inthe first 4 months of 2017.

14,1 °C 13,6 °C

Difference-0,5 °C

20172016

AverageTemperature

of Turkey

3.000

2.500

2.000

1.500

1.000

500

0

30

25

20

15

10

5

0 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Million-m3 Temperature-° C2017-2016 Residental Consumption and Temperature Chart

The changes in the number of subscribers take effect in thenext year. New subscribers do not use natural gas in fullcapacity. Therefore, while 850.000 subscribers involved inthe system in 2016 affected 2017 average, it is estimatedthat 1.1 million residential subscribers included in thedistribution system will have an effect on 2018.

The first 4 months of 2017 were 2°C colder

than those of 2016 and there was an

increase of 2 BCM in demand in residences

December 2017 was 5°C hotter than December 2016; so, there was a

decrease of 400 MCM in demand in residences.

2017 2016 Ave. Temp 2017 Ave. Temp 2016

Consumption

11

The average consumption per residence in Turkey was 1032 m3. Compared to 2016, the consumption perresidence increased by 10.5% (934 m3 in 2016). While the maximum average consumption per residence wasin Ardahan (1636 m3), the province with minimum average consumption per residence (820 m3) was Antalya.

• Ankara 1099 m3

• Kocaeli 1016 m3

• İzmir 1004 m3

• İstanbul 948 m3

• Bursa 901 m3

In 2017, theconsumption perresidence in 64 of 77provinces where naturalgas is distributed washigher than the Turkey’saverage. Compared to2016, in 2017, theaverage consumptionper residence increasedin 66 provinces butdecreased in 8provinces.

1083m3

869 m3

887 m3

856 m3

890 m3

Province 2017 2016

Consumption per residence in 5 provinces with maximum subscribers in 2017;

%1,55

%17

%14

%10,7

%1,14

1050

1000

950

900

850

800

0 2013 2014 2015 2016 2017

Average Consumption per Residence Between 2013-2017

10

06

m3

86

5 m

3

94

5 m

3

93

4 m

3

10

32

m3

5 Provinces with maximum avg. consumption per residence

• Ardahan 1636 m3

• Karabük 1517 m3

• Kars 1488 m3

• Van 1457 m3

• Bayburt 1348 m3

1544 m3

1297 m3

1395 m3

1388m3

1273m3

Province 2017 2016

%6

%17

%7

%5

%5,9

Change

5 Provinces with minimum avg. Consumption per residence

2017 2016

• Antalya 820 m3

• Bursa 901 m3

• Kırşehir 926 m3

• Mersin 942 m3

• İstanbul 948 m3

701 m3

890 m3

834 m3

750 m3

857 m3

%17,0

%1,2

%11,0

%25,4

%10,7

ChangeProvince

Change

Consumption

12

Province Based Consumption per Residence Map

Consumption

13

In 2017, the amount of natural gas consumed in power plants increased by 22.5% to 20.4 billion m3, compared to 2016. The reasons ofthis increase include;

• The price advantage of natural gas

• 2017 was a dry year

• The increase in demand due to thecold winter

Amount of Total Rainfall Between 2015-2017 - billion m3

71.232 64.184 47.170

2015 2016 2017

Million-m3

30.000

25.000

20.000

15.000

10.000

5.000

0

60

50

40

30

20

10

0

Share(%)

21

.05

3

23

.44

2

19

.01

0

16

.73

0

20

.48

4

2013 2014 2015 2016

2013-2017 Power Plants Consumption and Natural Gas Total Consumption Share

2017

Share of NG in PowerGeneration

Share of PowerPlants in NG Consumption

Consumption

14

In 2017, 15.1 billion m3 natural gas was consumed in the industrial sector. The industrial consumption increased 7% in 2017 comparedto 2016. In the Marmara region whose nearly all provinces are among the 25 most industrial cities of Turkey, 7 billion m3 natural gaswas consumed in the industrial facilities. Marmara region has a share of 46% in the industrial consumption in 2017. In the Aegeanregion which is also industrially developed, 3.2 billion m3 natural gas was consumed in 2017. The natural gas consumed in theindustrial sector of the Aegean region has a share of 21% in the total consumption.

Region Consumption Share in industrialconsumption

Central Anatolia 1,89 billion m3 %13

Mediterranean 1,66 billion m3 %11

Black Sea 882 billion m3 %6

South EasternAnatolia

312 billion m3 %2

Eastern Anatolia 130 billion m3 %1

In the province based industrial consumption ratings, Kocaeli ranks first with a consumption of 1.65 billion m3. It is followed byIstanbul with 1.36 billion m3 consumption and Izmir with 1.33 billion consumptions in the industry sector.

18.000

15.000

12.000

9.000

6.000

3.000

0

2013 2014 2015 2016 2017

2013-2017 Industrial Sector Consumption

11.52812.376

13.965 13.547

15.078

Consumption

15

*Values are specified in Million m3

Sector 2016 2017 Change (%)

1. Transformation/Conversion Sector 16.730,30 20.484,20 22%

1.1. Power Plants 12.570,41 19.309,90 54%

1.2. Autoproducer Power Plants 3.490,31 297,39 -91%

1.3. Heat and Electricity (CHP) Plants 33,20 58,21 75%

1.4. Autoproducer Heat and Electricity Plants 361,36 744,76 106%

1.5. Heat Plants 25,62 0,00 -100%

1.6. Autoproducer Heat Plants 249,34 10,78 -96%

1.7. Other Conversion Sector Consumers 0,06 63,18 98619%

2. Energy Sector 289,54 503,60 74%

2.1. Oil Refineries 179,40 180,70 1%

2.2. Blast Furnaces 37,34 306,12 720%

2.3. Electricity, CHP and Heat Plants consumed as fuel 5,28 10,53 99%

2.4. Other Energy Sector Consumers 67,52 6,25 -91%

3. Transportation Sector 82,30 141,50 72%

3.1. Vehicle Fuel 81,12 83,43 3%

3.2. Pipeline Transportation 0,06 56,70 92851%

3.3. Other Transportation Sector Consumers 1,08 1,34 24%

4. Industrial Sector 14.095,12 15.078,16 7%

4.1. Wood Products Processing 199,99 195,21 -2%

4.10. Chemistry (including Petrochemistry) 2.435,06 2.593,89 7%

4.11. Mining and quarrying 109,79 140,38 28%

4.12. Machinery Industry 63,37 67,29 6%

4.13. Textile, Leather and Clothing Industry 787,00 802,37 2%

4.14. Tobacco and Tobacco Products 17,96 12,70 -29%

4.15. Transportation Vehicles Industry (Automotive, Aircraft Industry, etc.)

163,03 150,31 -8%

4.16. OSB's 3.259,82 3.792,53 16%

4.17. Other Industrial Sector Consumers 958,58 1.058,41 10%

4.2. Alcohol and Alcohol Products 19,93 19,87 0%

4.3. Non-metallic Minerals (Glass, ceramics, cement, etc.) 1.717,80 1.786,70 4%

4.4. Iron and Steel 1.286,43 1.518,93 18%

4.5. Production and Processing of Non-ferrous Metals (Chromium, Copper, etc.)

585,21 450,05 -23%

4.6. Food and Beverages 1.080,50 1.139,74 5%

4.7. Fertilizer 588,50 493,40 -16%

4.8. Construction (Construction products, road construction) 547,71 600,56 10%

4.9. Paper, Cellulose and Printing 274,44 255,82 -7%

Sector 2016 2017 Change (%)

5. Service Sector 3.096,55 3.874,30 25%

5.1. Business 1.411,90 1.835,06 30%

5.2. Government Offices 1.430,18 1.720,92 20%

5.3. Other Service Sector Consumers 254,47 318,28 25%

6.1. Housing 11.617,75 13.301,49 14%

6.2. Agriculture/ Forestry 17,87 20,46 14%

6.3. Livestock (balıkçılık, kümes ve ahır hayvancılığı, vs.) 50,21 58,62 17%

6.4. Other Non-Specified Sector Consumers 34,80 40,42 16%

7.1. Losses 4,09 4,04 -1%

Grand Total 45.993,82 53.359,21 16%

Prices

16

In 2017, the average annual expenditure of natural gas ofa residence was 1.220 Turkish Lira. Natural gas is 42%cheaper than the closest fuel source.

300

250

200

150

100

50

0

Jan. Feb. March April May June July August Sept. Oct. Nov.

271 20

2017 Average Monthly Natural Gas Expenditure of Residences -TL

Dec.

213 175 112 52 21 18 21 46 106 165

7000

6000

5000

4000

3000

2000

1000

0

LPG

-Bu

lkG

as

Fuel

-Oil

Nat

ura

l Gas

Imp

ort

Co

al

Lign

ite

+18

mm

1.7

37

TL

1.8

09

TL

2.1

72

TL

2.9

99

TL

4.2

33

TL

LPG

-Bo

ttle

dG

as

Elec

tric

ity-

Res

iden

tal

1.2

20

TL

5.6

58

TL

6.1

47

TL

Lign

ite

+20

mm

When the annual fuel costs are compared, it is observedthat natural gas has the minimum fuel cost of 1.220TL/year and LPG- Bottled Gas has the maximum fuel costof 6.147 TL/year.

In 2017, natural gas is 517 TL cheaper than

the closest fuel.

2017 Natural Gas and Other Fuel Sources Expenditure Comparison -TL

In November and December 2017, natural gas bills

decreased by 20- 25% due to the high

temperature in Turkey

* This study was carried out based on a residence of 100 m2 and productivity factors.

Natural Gas and Environment

17

In 2017, 13.610.325 subscribers consumed 13,3billion m3 natural gas in Turkey. According to thecalculations made by considering that theresidences which do not have natural gas prefercoal and other fuels, carbon emission of allresidences in 2017 is 66.3 million ton in Turkey.

100

80

60

40

20

0

51,5

29,8

36,5 96,7

Carbon Emission if All Residences Used Natural Gas

2017 Residences CarbonEmission

Carbon Emission if All Residences used Coal

2017 Carbon Emission ValuesMillion Ton

It is possible to decrease our carbon

emission (of residences) by 23%

(14.8 million ton) by extending the use of

natural gas in residences in Turkey.

66,3 Million Ton

The use of natural gas in residences

instead of coal provided a carbon emission saving of 30.4 million ton in

residences, in 2017.

30.4 Million Ton Carbon Emission Saving Equivalents

In 2017, the average carbon emission of a residence usingnatural gas was 2.2 ton. If coal and other fuels had beenpreferred, the average carbon emission per residence wouldhave been about 4.3 ton. Due to the natural gas, the carbonemission was 50% less per residence.

2,1 Ton Carbon

Emission Saving

Equivalences

Use of 16 bottles of 45 kg propane gas

Emission value of a four-door mid-range vehicle driving 10.000 km/year

Emission saving of 71 LED lamps (for 1 year)

Carbon emission value that 100 trees can clean in a year

2018 at a Glance

18

• It is estimated that, in 2018, the distribution companies will invest approximately1.7 billion TL. Nearly 700 Million TL of this investment will be used for expansion.

• As of 2018, the natural gas service will have reached 524 districts and towns of81 provinces of Turkey once Hakkari, Şırnak and Artvin have been provided withthe natural gas supply

• Within the scope of the expansion, natural gas will be provided to new 98 districtsand towns.

• In 2018, the distribution network will also reach new 2.5 million citizens and atotal of 64.5 million citizens will benefit from natural gas distribution service.

• According to the calculations, the total demand of natural gas of Turkey in 2018 is51.9 billion m3.

• It is estimated that the total number of subscribers will be more than 15 millionand the consumptions of the residences will be about 13 billion m3.

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This report was written by GAZBİR by using the data of EMRA, TurkStat and Turkish State Meteorological Service. Cannot be use without reference.

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