Natural Gas Prices May Fall by 30%! Following the decline in oil prices, news of a possible discount on natural gas is now circulating. The reduction, expected to reach the market within a maximum of nine months, could lower long‑term contract prices for natural gas across Turkey by about 30%. Calculated on a per‑cubic‑meter basis, this decrease would be equivalent to roughly $180 per thousand cubic meters.
Experts say that the drop in oil prices may be reflected in natural gas prices in the coming months. After the coronavirus outbreak in China spread almost worldwide, global oil demand was negatively affected. At last week’s OPEC meeting no additional production cuts were announced, and Saudi Arabia reduced export prices for crude oil, which together contributed to a significant fall in oil prices.
As a result, Brent crude has fallen to around $31.27 per barrel, while West Texas Intermediate has dipped to roughly $29.46 per barrel. Analysts expect oil prices to remain below $50 per barrel in the short to medium term. They note that this decline in oil could lead to reductions in oil‑indexed natural gas and LNG prices within six to nine months.
Reductions Possible in Natural Gas Tariffs
Lower global demand for oil could trigger significant decreases in natural gas and liquefied natural gas prices in the coming months. Such a drop would present an important advantage for Turkey. The country imports natural gas under long‑term contracts primarily from Russia, Iran and Azerbaijan. Prices for gas imported from these three suppliers are set using a formula tied to crude oil and refined petroleum product prices; those oil‑linked prices typically affect gas tariffs with a lag of six to nine months.
For the first quarter of 2020, Turkey’s long‑term contracted imports are priced at about $250–$260 per thousand cubic meters. If oil prices remain low and that trend continues, analysts anticipate an average reduction of roughly 30% by the fourth quarter of 2020. Applying a 30% decrease would bring the price per thousand cubic meters down toward $180. Such a fall would translate into lower energy bills across Turkey.