Turkey’s and Europe’s leading CNG distributor in terms of station infrastructure and bulk sales volume

Naturelgaz, a 95.5% subsidiary of GIH, is Turkey’s and Europe’s leading CNG (Compressed Natural Gas) distributor in terms of station infrastructure and bulk sales volume. The company focuses on the sales and distribution of bulk CNG to industrial and commercial customers – such as factories, power generators, hotels, asphalt plants – in addition to cities (households) not connected to a natural gas pipeline due to economic or geographic constraints.

The Turkish non-piped natural gas market (LNG + CNG) is based on bulk products supplied to industrial facilities and commercial consumers. These users – such as cities, asphalt plants, food processors, hotels and shopping malls, among others – lack access to natural gas pipelines. As of end-2019, the total market amounts to about 719 mcm, of which CNG has a 30% share or 218 mcm.

In 2019, Naturelgaz distributed 159 million Sm³ of CNG (excluding Auto CNG sales amounting to 7.7 million Sm³), capturing a 22.2% share of the total non-piped natural gas market in Turkey. The company recorded a 31.3% market share through the hinterlands covered by its filling plants.

Naturelgaz CNG infrastructure consists of 10 bulk CNG plants, 3 auto-CNG stations, 296 CNG road tankers and 47 industrial scale compressors. All facilities and equipment established and used by the company conform to international standards and regulations.

CNG Plants: İzmir, Bursa, Adapazarı, Antalya, Konya, Kayseri, Kırıkkale, Osmaniye, Rize, Elazığ
Auto CNG Stations: Istanbul (Alibeyköy), Bolu, Kocaeli (Çayırova)

Bulk CNG
Compared to LNG, CNG provides logistical advantages thanks to the natural gas pipeline network. In addition, CNG bears lower health and safety risks. The Naturelgaz Rize CNG filling plant was the inflection point for the CNG market and Naturelgaz. As a result, most public tenders have included CNG in the tender specs, as well as LNG. Customers have come to recognize Naturelgaz as the best since it is.

In 2019, Naturelgaz generated a sales volume of 143.3 million Sm³. In 2020, the company’s bulk CNG sales volume is expected to climb to 148.8 million Sm³ by focusing on new customer acquisitions to reduce the effects of seasonality and boost market share.

 

Auto CNG
In 2019, Naturelgaz generated a sales volume of 7.7 mn Sm³ from Istanbul and Bolu stations. The company also won the tender to supply 120 CNG buses of private operators working for the Istanbul Metropolitan Municipality.

Regarding the development of the Auto CNG market, Naturelgaz is focused onthe road and in-city transportation sectors to supplement existing bulk CNG sales. Compared to other energy sources, the two key advantages of using CNG in road transportation are cost saving and environmental sustainability.

The target customer segments in Auto-CNG are:

• Route-to-route logistics operators
• Closed loop in-city passenger bus operators
• Closed loop garbage truck operators

Naturelgaz cooperates with OEM vehicle producers to expand the number of CNG vehicle options in Turkey, believing that OEM CNG vehicles will drive higher market growth. In 2020, Auto CNG sales volume is expected to reach 7.9 million Sm³.

 

City Gas
City Gas - a government initiative – declares that towns not currently connected to natural gas pipelines in Turkey due to economic or geographic constraints, will be supplied by CNG via tenders. The requisite low pressure pipeline infrastructure is being established in cities by natural gas distribution companies connecting households to natural gas via the CNG system.

With City Gas, Turkey aims to expand the reach of natural gas to additional towns via tender offerings. Naturelgaz plans to participate in such tenders to sustain its solid position in the sector.

This new business line is strategic for Naturelgaz not only given the opportunity to increase volumes, but to raise efficiency.

In 2019, Naturelgaz supplied 16.0 million Sm³ CNG to 42 towns in the provinces of Elazığ, Rize, Trabzon, Adana, Balıkesir, Izmir, Manisa, Erzurum, Tokat, Kırıkkale, Kastamonu, Kars, Bursa and Kırklareli with a total population of 950,000 in cooperation with local gas distributors. In 2020, the City Gas sales volume is expected to reach 47.8 million Sm³.

 

Well Head CNG
There is a clear need for CNG in gas wells of uncertain reserves, or where the closest gas pipeline is remotely located and the connection is not economically viable. In 2018, Naturelgaz began to supply CNG equipment and operational services to two natural gas production companies at the Silivri and Gelibolu gas wells. In 2019, Naturelgaz signed a contract with a company to set up a well head CNG plant, distribute the gas in CNG form from the gas field to the daughter field, where the gas will be injected into the pipeline. During the year, Naturelgaz recorded EBITDA of TL 1.5 million from well head CNG operations and expects to post EBITDA of TL 3.5 million in 2020.

 

STRATEGY:

1. Bulk CNG: Naturelgaz will focus on acquiring new customers with a stable consumption pattern throughout the year to reduce seasonality and enlarge the existing customer base.
2. Auto CNG: Naturelgaz aims to extend the coverage of Auto CNG stations by supplying CNG buses at bus terminals other than Alibeyköy and Bolu, develop Auto CNG projects in cooperation with OEM producers and conversion companies, and evaluate cooperation opportunities with fuel distribution companies to expand the station network.
3. City Gas: Turkey still has many zones that not reached by natural gas, either because of geographical obstacles or inadequate economics. Naturelgaz aims to prioritize the City Gas project by increasing coverage and sales volume to curb the effects of seasonality and make the efficient use of CNG equipment in winter possible.
4. Well Head CNG: Naturelgaz aims to increase its project portfolio by supplying integrated CNG solutions to well operators, mainly in Turkey’s Thrace region.
5. International Expansion: In 2020, Naturelgaz aims to extend its experience and investments to surrounding markets such as Africa that have an underdeveloped power infrastructure, and therefore solid growth potential. In addition, new international expansion/project opportunities will be evaluated.