Turkey

| Introduction | Background | Oil | Natural Gas | | Foreign Investment | Who's Who | Links | Bibliography |

I. Introduction

Turkey officially joined the INOGATE Programme on 30 March 2000 under the signature of the Deputy Prime Minister, Minister of Energy & Natural Resources Mr. Gumur Ersumer.

The Umbrella Agreement entered into force on 17 February 2001.

II. Background

Geography and Topology: Turkey is located in southeastern Europe and southwestern Asia (that portion of Turkey west of the Bosporus is geographically part of Europe), bordering the Black Sea, between Bulgaria and Georgia, and bordering the Aegean Sea and the Mediterranean Sea, between Greece and Syria.

Total area: 780,580 sq km; border countries: Armenia 268 km, Azerbaijan 9 km, Bulgaria 240 km, Georgia 252 km, Greece 206 km, Iran 499 km, Iraq 352 km, Syria 822 km.

Capital: Ankara

Population: 67,308,928 (July 2002 est.) of which Turkish 80%, Kurdish 20%.

Economy: Since 1981, after the government initiated a program of massive reforms, Turkey has made impressive progress in building a free-market-orientated economy open to foreign trade and investment. As a result of these efforts, Turkey's dynamic economy is a combination of modern industry and commerce with traditional agriculture and craft sectors (agriculture still accounts for a majority of jobs - 45%, as well as 15% of GDP). The most important industry sectors include textile and clothing manufacturing (which is almost entirely in private hands), food processing, mining (coal, chromate, copper, boron), steel, oil, construction, and paper.

The major growth sectors in Turkey's economy are energy (the demand for electricity is growing by 10% per year and is expected to reach 130 billion kWh in 2000), telecommunications (Turkey is expected to install up to 2.5 million new access lines annually and to increase telephone penetration from the current 27% to 40% by 2005), and transportation. Turkey is a member of the WTO; exports from the country totaled $27 billion in 1999, yet even as imports were steadily declining, they still ensured a $14 billion trade deficit for the year.

Despite growth in Turkey's private sector in recent years, developments in the country's energy industry are still heavily influenced by the central government. The main energy decision-making body is the Ministry of Energy and Natural Resources (ETKB).

Prior to Turkey's recent severe economic difficulties, the country's energy consumption had been growing much faster than its production, making Turkey a rapidly growing energy importer. Assuming that the Turkish economy and energy demand return to a rapid growth path, Turkey will require billions of dollars worth of investments in coming years. On April 5, 2001, Turkey announced that it had ratified the Energy Charter Treaty, the international legal framework for energy investment. Also, in early 2001, the Turkish parliament passed an energy liberalization law aimed at ending the government's monopoly in the energy sector, and also geared towards attracting foreign energy investment. In late 2001, Turkey established the Energy Market Board and named Yusuf Gunay as its first energy regulator.

Basic economic indicators:

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III. Oil

Turkey's strategic location makes it a natural "energy bridge" between major oil producing areas in the Middle East and Caspian Sea regions on the one hand, and consumer markets in Europe on the other. Turkey's port of Ceyhan is an important outlet both for current Iraqi oil exports as well as for potential future Caspian oil exports. Turkey's Bosporus Straits are a major shipping "choke point" between the Black and Mediterranean Seas. Finally, Turkey is a rapidly growing energy consumer in its own right.

In general, Turkish oil consumption has increased in recent years, although the country's recent economic recession plus price deregulation measures (which have raised the price of many oil products) since June 1999 appear to have interrupted this trend for the time being. During the first four months of 2002, for instance, it appears that Turkish oil consumption and imports were down approximately 60,000 barrels per day (bbl/d) from the same period in 2000. In the long-run, Turkish oil demand and imports are expected to resume steady growth. Oil provides around 42% of Turkey's total energy requirements, but its share is declining (as the share of natural gas rises). Around 90% of Turkey's oil supplies are imported, mainly from the Middle East (Saudi Arabia, Iran, Iraq, Syria) and Russia. Turkey's port of Ceyhan is a major outlet for Iraqi oil exports, with pipeline capacity from Iraq about 1.2 million bbl/d.

Turkey's oil production is accounted for primarily by three companies -- the Turkish State Petroleum Company (TPAO), and foreign operators Royal Dutch/Shell (Shell) and ExxonMobil. Smaller companies include Petrom of Romania (produces around 2,600 bbl/d in the Selmo block) and Aladdin Middle East (480 bbl/d in Siirt and Gaziantep). TPAO alone accounts for about 80% of the country's total oil output (currently around 56,000 bbl/d, down from 90,000 bbl/d in 1991). Turkish oil fields are generally small, and scattered around the country. Oil fields in the country's southeast (specifically the Hakkari Basin, Turkey's main oil producing area) are generally old and expensive to exploit. In addition to the Hakkari Basin, Turkey contains oil prospects in its European provinces, in the Black Sea shelf region, and in other oil basins in southern and southeastern Turkey.

Pipelines
Oil and gas transportation is a crucial and contentious issue in the Caspian Sea/Central Asia regions. Turkey and the United States have pushed for a "Western route" pipeline that will carry oil from Azerbaijan's port of Baku through Azerbaijan and Georgia and then across Turkey to Ceyhan. The planned 1-million-bbl/d capacity, "Main Export Pipeline" will stretch approximately 1,038 miles (281 miles through Azerbaijan, 135 miles through Georgia, and 622 miles through Turkey) and is expected to cost $2.8-$2.9 billion to construct. Despite initial opposition to the pipeline, which several oil companies criticized as too costly and uneconomical with the planned volumes from Azerbaijan, construction on the Turkish section of the pipeline began in June 2002. The entire pipeline is expected to be finished in late 2004, with the first tanker leaving Ceyhan with Azeri oil in January 2005.

Russia, on the other hand, has promoted a "Northern route" across the Caucasus to the Russian Black Sea port of Novorossiisk. In March 2001, the Caspian Pipeline Consortium (CPC) commissioned the 990-mile, $2.5 billion, 1.34 million-bbl/d-capacity pipeline. From there, oil is transported through the Bosporus Straits. Preliminary plans are to increase exports via the CPC pipeline to 520,000 bbl/d in 2003, but the pipeline is not scheduled to reach its full capacity until about 2015. Turkey has raised concerns about the ability of the Bosporus Straits to handle additional tanker traffic that will be necessary to handle the planned volume of Kazakh oil to be exported via the CPC pipeline.

Turkey has expressed its concern that the Straits, already a major chokepoint for oil tankers, cannot handle the strain of additional traffic, raising environmental concerns about a collision leading to an oil spill in the Straits. Although Kazakhstan has argued against limiting oil tanker traffic through the Straits, a number of "Bosporus bypass" options are under consideration or being developed in southeastern Europe. In addition, Ukraine already has constructed a new pipeline, the Odessa-Brody pipeline, specifically to transport oil from the Caspian Sea region to European markets.

One advantage which Baku-Ceyhan has over other potential options for Caspian oil transport is that Ceyhan can handle Very Large Crude Carriers (VLCCs), while the ports of Supsa (Georgia) and Novorossiisk (Russia) are restricted to smaller LR-2 tankers which can transit the Bosporus. Another advantage for Ceyhan is that it can remain open all year, compared to Novorossiisk, which is closed up to two months per year due to bad weather. After failing to come to agreement with other energy companies to join the sponsor group, in March 2002 the Azerbaijan State Oil Company (SOCAR) reduced its stake in the pipeline project to 25%, distributing 20% among other group members. In June 2002, SOCAR sold an additional 5% share to TotalFinaElf (France-Belgium), but rejected a proposal from ChevronTexaco to join the sponsor group. At the end of June 2002, the head of the sponsorship group, Michael Townshend of BP, said that the pipeline ownership group was complete. Shares in MEPCO are as follows: BP (38.21%), SOCAR (20%), Unocal (9.58%), Statoil (8.9%), TPAO (7.55%), TotalFinaElf (5%), ENI (5%), Itochu (3.4%), and Saudi Delta Hess (2.36%).

Refining/Downstream Turkey has refining capacity of 719,275 bbl/d at 6 refineries. Refining and other downstream operations in Turkey are dominated by partly-state-owned company Tupras, which has four main refining complexes: Batman in the southeast, Aliaga near Izmir, Izmit near Istanbul (the country's largest refinery, damaged during the August 1999 earthquake), and the Central The Anatolian Refinery at Kirikkale near Ankara. In 2002, Tupras' share of the Turkish fuels and lubricants market was around 78%, with other major retailers including BP, ExxonMobil, TotalFinaElf, Agip, and ConocoPhillips. Tupras is planning a fifth refinery - a $700-$800 million facility near Yarimca in western Turkey - to be completed by 2007. Tupras has a modernization program designed to switch output at its refineries towards lighter products. Turkey's sole private refinery is ATAS, near Mersin on the Mediterranean coast, a joint venture of Mobil (51%), Shell (27%), BP Amoco (17%), and local company Marmara Petrol ve Rafineri Isleri AS (5%). In July 2002, Turkey's government announced that it would sell its 25.8% share in Poas to the majority shareholder, Is Dogan Petrol Yatirimlari AS. The announcement came amidst calls by the IMF for an acceleration in Turkey's privatization process. In a related development, Turkey's privatization agency stated in early July 2002 that the government hoped to privatize most of the country's energy sector during 2003.

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IV. Natural Gas

Consumption and Production
Turkey consumed 520 billion cubic feet (Bcf) of natural gas (nearly all imported) in 2000, accounting for around 17% of Turkey's total energy consumption (Turkish gas consumption in 2002 is estimated at around 700 Bcf). Prior to Turkey's recent severe economic problems (plus price deregulation moves), Turkish natural gas demand had been projected to increase extremely rapidly in coming years, with the prime consumers expected to be natural-gas-fired electric power plants and industrial users. Now, however, state natural gas and pipeline company Botas has revised its natural gas demand growth projections down sharply based on Turkey's economic problems. For instance, Turkish natural gas demand had been forecast at about 1.6 trillion cubic feet (Tcf) in 2005, but now is expected to reach only 1.1 Tcf in that year, a 37% downward revision. Many analysts now believe that, given lower Turkish natural gas consumption forecasts, only one of the main import options under development (i.e., Blue Stream, Trans-Caspian Pipeline - TCP, Shah Deniz) -- can be supported for some time.

This sharp downward revision in Turkey's projected natural gas demand could have significant repercussions, since Turkey already has signed contracts for far more natural gas than it is expected to need. To date, Turkey has signed deals for around 2 Tcf per year of natural gas imports beginning in 2005, around three times greater than current Turkish gas consumption. Of this total, over 20% is already coming from Russia via Bulgaria (studies on expanding the Russia-Bulgaria-Turkey "Main Line" are underway), 17% from Iran, and 9% from Algeria and Nigeria combined as liquefied natural gas (LNG). In the future, around one-fourth of Turkey's gas imports are to be supplied from Russia via the Black Sea (see "Blue Stream" below), another quarter from Turkmenistan (beginning in 2005), and about 10% from Azerbaijan (beginning in 2005). Under the "take-or-pay" provisions of natural gas supply contracts with countries like Iran and Russia, Turkey reportedly could be forced to pay cash penalties of up to $1 billion per year if it fails to purchase contracted gas. Already, the National Iranian Gas Company (NIGC) has stated that, if Turkey fails to take the volume of natural gas agreed to for 2002, NIGC will invoke a penalty clause under "take or pay" provisions.

Natural gas is Turkey's preferred fuel for new power plant capacity for several reasons: environmental (gas is less polluting than coal, lignite, or oil); geographic (Turkey is close to huge amounts of gas in the Middle East and Central Asia); economic (Turkey could offset part of its energy import bill through transit fees it could charge for oil and gas shipments across its territory); and political (Turkey is seeking to strengthen relations with Caspian and Central Asian countries, several of which are potentially large gas exporters). The United States, among others, has been encouraging Turkey to utilize its unique geographical position to become a major transit center for natural gas from the Caspian/Central Asia to Europe. At the same time, however, Turkey's reliance on Russia for gas imports could reach 70% or higher, seemingly undercutting Turkey's goal of diversifying its fuel suppliers.

Natural Gas Pipelines
SPP is an owner and operator of all the natural gas transportation/distribution pipelines in the country, including four international transit pipelines of more than 2,000 kilometers in cumulative length. The Slovak gas transmission system for international gas transit is linked to the main European transport systems. A gas dispatch center is located in the city of Nitra. There is also a "custody transfer station" in the city of Vel'ke Kapusany in eastern Slovakia where gas from the transit pipelines can be transferred into Slovakia's gas transmission grid; Slovakia has, in the past, taken gas from the pipeline in lieu of transit fees. As of 2000, SPP's gas pipeline network included nearly 6,000 kilometers of long distance transit pipelines and almost 21,000 kilometers of smaller pipelines in its local distribution network.

Turkish natural gas production in 2000 (23 billion cubic feet -- Bcf) met around 4% of domestic natural gas consumption requirements. Major natural gas producers in Turkey include Arco, TPAO and Shell. Marmara Kuzey (North Marmara), which came onstream in May 1997, is the country's largest non-associated gas field. Marmara Kuzey is located offshore in the Thrace-Gallipoli Basin of the Sea of Marmara. In March 2002, the Gocerler natural gas field was officially opened, 16 months after its discovery in the Thrace basin. Production potential is estimated to be as high as 100 Bcf per year. Also, in July 2001, TPAO announced that it had found gas in the Mersin and Iskenderun bays in Turkish areas of the Mediterranean. Currently, most Turkish associated gas is reinjected into oilfields as part of an Enhanced Oil Recovery (EOR) system.

"Blue Stream" Pipeline
On December 15, 1997, Russia and Turkey signed a 25-year deal under which the Russian gas company, Gazprom, would construct a new natural gas export pipeline (called "Blue Stream") to Turkey for delivery capacity of around 565 Bcf annually, with initial deliveries possibly starting in 2002. The $3 billion, 758-mile dual pipeline is slated to run from Izobilnoye in southern Russia, to Dzhugba on the Black Sea, then under the Black Sea for about 247 miles to the Turkish port of Samsun, and on to Ankara.

In March 2002, the first line of "Blue Stream" was completed, with work on the deep-sea portion of the second line begun in June. Construction of the Turkish onshore section of the pipeline is already complete, while the 222-mile Russian section of the pipeline, which includes compressor stations and underground storage facilities, is scheduled to be finished by September 2002.

Natural gas supplies through the Blue Stream pipeline are slated to begin in October 2002, with Russia scheduled to deliver 70.6 Bcf of natural gas to Turkey via the pipeline this year. By 2009, Blue Stream is expected to reach peak capacity of 565 Bcf per year. Over the course of the 25-year agreement, Turkey will import 14.1 Tcf of natural gas from Russia via Blue Stream. Eventually, the Blue Stream project could be extended onwards to other Mediterranean countries, including Greece.

Other Natural Gas Import Deals
In late January 2002, Iran and Turkey officially inaugurated a much-delayed natural gas pipeline link between the two countries. This follows several years of delays due to economic, political, and technical factors. In 1996, Iran and Turkey had signed a $20 billion agreement that called for Iran to supply Turkey with more than 8 Tcf of natural gas over a period of 22 years beginning in late 1999. Officials in Turkey and Iran variously blamed U.S. sanctions, financing problems on the Turkish leg of the $1.9 billion pipeline, economic recession in Turkey, and delays by the Iranians in completing an important metering station for delaying the project. Exports of Iranian natural gas to Turkey are expected at about 105 Bcf in 2002, rising to 350 Bcf per year by 2007. There are questions, however, whether Turkish demand will grow rapidly enough to absorb this volume of natural gas from Iran, in addition to gas slated to be supplied by Russia, Algeria, and Nigeria.

If Turkish demand does not support the level of natural gas imports for which it has contracted (from Iran and others), Turkey could become an important transit center for natural gas exports to Greece and beyond. Along these lines, Greece and Turkey signed an agreement on March 28, 2002 which calls for extending the natural gas pipeline from Iran to Turkey into Greece. Reportedly, the 177-mile-long pipeline would connect Ankara to Alexandroupolis in northern Greece and would cost $300 million. After that, natural gas could be transported to Europe via Bulgaria or via an undersea pipeline to Italy, where gas demand -- especially for electric power generation -- is expected to grow rapidly in coming years. A deep water option could be extremely expensive, however, making an overland route more likely.

On May 21, 1999, state natural gas and pipeline company Botas signed an agreement on building a $2-$2.4 billion, 1,050-mile, gas pipeline from Turkmenistan, underneath the Caspian Sea, across Azerbaijan and Georgia (both of which would collect transit fees), and on to Turkey. Gas deliveries of 565-1,060 Bcf per year are possible, with additional gas possibly being sent onwards to Europe. The consortium is led by US company Bechtel and including General Electric, Shell, and PSG International. In mid-July 1999, a top Turkish energy official stated that the TCP from Turkmenistan was still the preferred option for Turkey despite the potentially huge (as high as 35 trillion cubic feet -- Tcf) Shah Deniz gas field in Azerbaijan, which is located hundreds of miles closer (and on the western side of the Caspian Sea) to Turkey than Turkmenistan. Currently, however, progress on the TCP appears stalled, with the international consortium essentially having suspended operations, while Blue Stream proceeds.

Despite previous Turkish government statements that a gas pipeline from Turkmenistan was a top priority, this now seems highly unlikely, as it would compete against the proposed Blue Stream project, as well as against possible gas supplies from Iran and, especially, Azerbaijan. After months of negotiation and delay, Azerbaijan and Turkey signed a long-term natural gas purchase and supply contract on March 12, 2001. Starting in 2005 (delayed one year from the original target date), Azerbaijan will deliver 70 Bcf of natural gas to Turkey in 2005, rising to 177 Bcf in 2007 and around 230 Bcf per year from 2008 through 2020. Natural gas for the deal will come mainly from Azerbaijan's Shah Deniz field, which is scheduled to come online in 2004. In order to deliver this natural gas, it will be necessary to construct a pipeline from Baku to Erzurum in eastern Turkey, where the natural gas will join the Turkish natural gas distribution system. Originally, Azeri officials had hoped to use the existing Soviet-era Gazi-Magomed-Gazakh pipeline, but technical inspection of the pipeline, along with the planned export volumes, determined that a new pipeline will be necessary.

The Baku-Erzurum pipeline will stretch some 630 miles, including 290 miles in Azerbaijan and approximately 170 miles in both Georgia and Turkey. Currently, the pipeline project is estimated to cost $1 billion. Credits to be drawn from international financial institutions, including the World Bank, European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC), and investors from the United States and Japan are expected to cover 70% of the pipeline's construction costs, while shareholders in the development of the Shah Deniz field development will contribute the remaining 30%.

In September 2001, Georgia and Azerbaijan cleared a major hurdle for implementation of the pipeline plan by signing a transit agreement. The Azeri parliament ratified the transit agreement in October 2001, followed by the Georgian parliament in December 2001. In January 2002, Georgia announced it would build two, 88.3-Bcf-capacity underground natural gas storage facilities in the east and southwest of the country as part of the pipeline project.

Construction of the Baku-Erzurum pipeline is scheduled to begin in late 2002, with the pipeline operational by the end of 2004. Initial capacity on the pipeline is slated to be 777 billion cubic feet (Bcf) per year, with capacity eventually rising to 1.06 Tcf per year. With natural gas production in the first stage of exploitation of the Shah Deniz field expected to be 282 Bcf per year, the Baku-Erzurum pipeline will have excess capacity to pipe additional Caspian Sea region natural gas exports, possibly from Turkmenistan if the Caspian littoral states agree on a legal regime for the Sea, allowing the proposed TCP to be built.

Natural gas also could transit Georgia via a proposed north-south pipeline from Russia to eastern Turkey, with one route also passing through Armenia. In November 2000, Georgia approved a project for a 37-mile pipeline to carry Russian natural gas to Turkey via the Georgian Black Sea coast. After a September 2001 meeting, Georgian officials announced that representatives from Conoco and Turkey's Acsoy Group were ready to invest in the pipeline, which would transport 35.3 Bcf per year of natural gas from Kobuleti, Georgia, to Hopa, Turkey.

Georgia also has held discussions with Gazprom on refurbishing the existing North Caucasus-Transcaucasian natural gas pipeline and extending it into a trans-Georgian pipeline to bring Russian natural gas to Armenia and Turkey. However, this idea has lost some support as Russia focuses on delivering its gas to Turkey via the "Blue Stream" natural gas pipeline under the Black Sea.

Egypt, with huge gas reserves of its own, is another possible source of gas for Turkey, either by pipeline or via LNG tanker. This latter option would include construction of a $1.2-billion liquefaction terminal near Port Said on the Mediterranean coast, and a regasification facility at Izmir in Turkey. Egypt and Turkey signed a preliminary agreement for LNG exports in 1996, but analysts have raised serious questions about whether the project is economically feasible. Also, given the fact that Turkey already has committed to buying more gas than it probably needs for years to come, it is hard to see how Egyptian gas will fit into the picture. Still, new LNG terminals in Turkey are being planned, besides the sole existing, 140-Bcf capacity, terminal adjacent to the existing Marmara Ereglisi combined cycle gas turbine power station. Other possibilities include a regasification terminal at Aliaga (near Izmir on the Aegean Sea), an LNG terminal at Iskenderun on the Mediterranean, and even the world's first floating LNG terminal.

BOTAS
FOUNDED: 15 AUGUST 1974
HEADQUARTER : ANKARA
CAPITAL: 750 TRILLION TL.
ADDRESS: BILKENT PLAZA A-2 BLOK BILKENT 06530 ANKARA
TEL: + 90 312 297 2000
FAX: + 90 312 266 0733, 266 0734
PETROLEUM PIPELINE CORPORATION

Botas, Petroleum Pipeline Corporation was established as an affiliated company of Turkish Petroleum Corporation (TPAO) on August 15, 1974 in order to transport Iraqi crude oil to the Gulf of Iskenderun. In 1995, the company was restructured as a State Economic Enterprise (SEE) considering the company's task at present and in future.

Botas's business in transportation of crude oil by pipelines has expanded to cover the natural gas transportation and trade activities since 1987.

Headquartered in Ankara, BOTAS is organized throughout the Country in order to operate oil and natural gas systems efficiently by focusing on customer based activities. This network will develop more as new pipelines are becoming operational. The organizational structure of the Company is mainly comprising structures for natural gas and crude oil systems.

BOTAS International Ltd. was established in 1996 for the purpose of efficient participation in the international energy projects. BOTAS is also participated in TURUSGAZ holding 35% through which an additional gas is imported from the Russian Federation.

Having more than 27 years of experience in crude oil transportation, BOTAS intended to add Caspian Basin crude oil to Iraqi oil that is currently transported by ITP to Ceyhan Marine Terminal. Therefore, Ceyhan will become Persian Gulf of Mediterranean Sea. Iraqi oil produced in Kirkuk is transported to Ceyhan Marine Terminal by 1876 km long ITP of which 1297 km is pasing through Turkey. BOTAS also operates Batman-Dortyol, Ceyhan-Kirikkale and Selmo-Batman Crude oil Pipelines in the country. More than 6 Billlion barrels of crude oil was transported through 2297 km long with various diameter and 80.2 MTY capacity lines.

Transportation of Natural Gas from the Caspian Region to Europe
INOGATE-Turkey-Greece Natural Gas Pipeline Project
On 30 Mar?h 2000 Turkey has singed the Umbrella Agreement of INOGATE Programme. Regarding this meetings were held in Brussels on July 2000, by European Union Turkey and Greece. Under the concluding statement of these meetings, the parties agreed as the transportation of natural gas produced in the Caspian, Middle East and South Mediterranean countries to Greece via Turkey. On 18 January 2001 DEPA of Greece and BOTAS have signed Memorandum of Cooperation and accordingly technical working group started the studies for the interconnection if gas grids of both countries and creation of South European Gas Ring. Various meetings were held and regarding the Project. As a result the studies were combined and submitted to the European Union. BOTAS has declared its intend supply Greece with gas, and submitted draft Natural Gas Sales and Purchase Contract to DEPA, asking their opinion. Project studies an underway. According to the studies and projections of the world's leading research agencies and energy companies; natural gas volume transported from the Caspian and Middle East Region to Europe through Turkey will rapidly increase and reach enormous level in 2020. In this respect, studies were initiated. Second gate opening to Europe would be follow Bulgaria, Romania, Hungary and reach Austria. Negotiations are held with authorities of Romania, Bulgaria, and Austria.

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V. Investment Opportunities

Investment requirements in the oil sector are expected to be around 4.3 billion USD, 65% for oil pipeline projects and 30% for refining over the same period.

The following Oil Pipeline Projects are in various stages of realization:

• Caspian - Mediterranean
  The capacity of the line from Baku to Ceyhan is determined at 45 million tons/year, 20 million tons/year of which is for Kazakh crude and 25 million tons/year for Azeri crude oil. Two alternative routes are being studied. The investment cost is about 3.5 billion US dollars.
• Ceyhan - Samsun
  This project aims to meet the crude oil demand of existing and/or future refineries of Ukraine and other Black Sea Countries while avoiding passage through Canakkale and the Istanbul straits.

The investment requirement in the gas sector is around 6 billion USD. In the last few years BOTAS has already invested considerably in the gas sector.

The main gas projects underway, at present, are:

• Distribution Network in Bursa
  The project for construction of a distribution network in the town of Bursa started in 1992. Investment of 91 million USD has been allocated.
• Distribution Network of Eskisehir
  The cost of the project to construct a distribution network in the town of Eskisehir was 57 million USD.
• Turkmenistan - Turkey - Europe Pipeline
  This pipeline, which passes through Iran, will be 1440 km long. The cost of the first phase would amount to 3.6 billion US dollars, while the total investment of the both phases is estimated at 4.3 billion US dollars.
• Iran - Turkey - Europe Pipeline
  This pipeline is planned to transport Iranian natural gas to Turkey, in the first stage, and to European markets in later stages. The cost of this pipeline has been estimated at around 1.4 billion US dollars.
• Russian Federation - Turkey - Israel Pipeline The cost of the Izmit-Karadeniz Eregli pipeline is estimated as 36 million US dollars.
• Bursa - Can Pipeline
  This distribution pipeline, the first section of the Egee line will cost up to 18.7 million US dollars.
• Southern Gas Pipeline
  This is an extension of the existing Ankara-Kirikkale pipeline. Costs are estimated at 350 million US dollars.
• Karacabey - Izmir Pipeline
  The second phase of the Aegean Sea network will cost about 99 million US dollars.
• LNG terminal at Marmara Ereglisi
  A new LNG terminal at Iskenderun and/or Izmir is planned. The cost will be up to 364 million US dollars.

In conclusion, as an economically and socially stable country and located on the highway between East and West, Turkey offers opportunities as a dynamic market for investments and operations in the energy sector.

Investment Legislation

A main requirement in Turkish energy policy is to meet fast growing demand on time. Obviously this requires large investments. Private sector capabilities have had to be mobilized, because of the limited financial capacity of the public sector, and also to increase efficiency, effectiveness and profitability.

The following laws provide basis for realizing government energy policy:

• Law No 3096 on Granting Authorization to Institutions other than the Turkish Electricity Authority for Generation, Transmission, Distribution and Trade of Electricity
• Regulation No 233 determining the privatization in Electricity Sector
• Decree No 85/9799 providing the legal basis for the BOT model
• the Petroleum Law regulating exploration and production of hydrocarbons
• Decree No 397 on Natural Gas utilization
• The Mining Law and Mining Regulation

In December 1994, Turkey signed the Energy Charter Treaty which is the legal basis for co-operation among signatory countries in the energy field.

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VI. Who's Who

The Turkish energy sector is characterized by a strong public presence, with a large number of monopoly state enterprises:

• The Ministry of Energy and Natural Resources (MENR). MENR supervises the development of the Turkish energy resources. Its departments for Research Planning and Co-ordination co-ordinate the activities of the electricity companies and direct their plans.
• The State Planning Organization prepares and monitors macro plans and evaluates private sector energy investments with MENR
• A Treasury Under-secretary co-ordinates energy sector financing
• BOTAS is responsible for importing and transmitting natural gas
• The Turkish Petroleum Company (TPAO) is responsible for oil exploration and production
• TUPRAS is a state owned joint stock company operating refineries

Ministry of Energy and Natural Resources (MENR)

Minister: M.Cumhur Ersumer
Konya Yolu
06100 Bestepe, Ankara
Turkey
Tel: + 90 312 212 64 20
Fax: + 90 312 213 84 51

General Directorate of Energy Affairs
General Director: Mehmet Koyuncu
Konya Yolu
06100 Bestepe, Ankara
Turkey
Tel: + 90 312 212 64 20
Fax: + 90 312 223 69 84

General Directorate of Mine Affairs
General Director: Yener Candan Meric Sok. No 121
Senyuva Mah., 06100 Bestepe, Ankara
Turkey
Tel: + 90 312 212 80 00
Fax: + 90 312 213 84 51

Turkish Petroleum Corporation
General Director: M. Sitki Sancar
Mustafa Kemal Mah.
2 Nolu Cad. No 86
Ankara
Turkey
Tel: + 90 312 286 91 00
Fax: + 90 312 286 90 70

General Directorate of Petroleum Affairs
General Director: Ahmet E. Akcael
Ziya Gokalp Cad.
Poyraz Han No 41
Yenisehir, Ankara
Turkey
Tel: + 90 312 435 51 45
Fax: + 90 312 435 13 64

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VII. Links

Information on Turkey's Energy Sector - www.turkey.org/business/esector.htm
Turkey's Ministry of Energy and Natural Resources - www.menr.gov.tr
Turkey's Ministry of Foreign Affairs - www.mfa.gov.tr
Turkish Petroleum Corporation - www.tpao.gov.tr
Botas Petroleum Pipeline Corporation - www.botas.gov.tr
Black Sea Regional Energy Center - Turkey - www.bsrec.bg/turkey/turkey.html

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VIII. Bibliography

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