Analyzing the Impact of Black Sea Gas Production on the Turkish Natural Gas Market with a Mixed Complementarity Problem Approach

Abstract

The discovery of natural gas in Black Sea has been a milestone for the Turkish natural gas market. This study examined the impacts of the Black Sea natural gas production on the Turkish natural gas market using a market equilibrium model, which is simulated with existing data from the Turkish natural gas market and solved using the GAMS software. The findings suggest that if global natural gas and oil prices remain as expected or stronger, Black Sea production will place downward pressure on end-user prices; however, if global market prices are lower than expected, natural gas will not be produced and will not impact the natural gas market under an oligopolistic market structure. Our model adds to the literature by offering an economic analysis of a gas production project through a market equilibrium modelling approach.