General Information: The Republic of Turkey, with a population of 63 million, is slightly larger in area than Texas. It is bordered by Bulgaria, the Black Sea, and Georgia to the north, Armenia and Iran to the east, Iraq, Syria, and the Mediterranean Sea to the south, and Greece and the Aegean Sea to the west.
Most of Turkey is in Asia. The far northwestern part of the country is in Europe, and is separated from the rest of the country by the Dardanelles and Bosphorus straits, and the Sea of Marmara.
Turkey's currency, the lira, has an exchange rate of 672,700 lira to the U.S. dollar (as of February 2001). The gross domestic product (GDP) of Turkey, in 1999, was $409.4 billion (purchasing power parity).
Turkish Energy Policy:
Turkey expects a very large growth in energy demand as its economy expands, especially for electricity and natural gas. The International Energy Agency (IEA) has estimated Turkey's electric power consumption growth to be 9 percent per year between 1973 and 1995.
Turkey has adopted a policy of encouraging foreign investment in power plants and natural gas pipelines to meet the anticipated demand.
In 1999, Turkey changed its constitution to permit international arbitration of disputes involving foreign investors. Before this change, the issue had been a sticking point in financing projects in Turkey.
In January 2000, Bill No. 4501 was passed, implementing the constitutional amendment into associated law.
The Turkish Ministry of Energy and Natural Resources (MENR) is currently studying ways to restructure the electricity market and increase privatization.
Turkey intends to have government auditing and regulation in the new structure. These privatization studies began in 1997, financed by the World Bank.
It is expected that a bill based on the studies will be introduced into the Turkish Grand National Assembly in the future. The objectives of the bill are to encourage private investment, promote reliable low-cost electricity, and develop competition with a more transparent structure.
The energy bill is expected to set up a new regulatory body to oversee the electric sector, and will include unbundling of generation, transmission, distribution and commercial services.
It will also set up a National Transmission Company to handle electricity transmission. There will be a State Generation Company to run nuclear power; other generation is expected to be privatized eventually.
The State Distribution Company will perform distribution in regions that have not been privatized. There will also be a Central Buyer-Seller Company, responsible for wholesale purchases and sales of electricity. The energy bill is expected to bring about a major restructuring of electric power in Turkey.
In late 2000, Turkey suffered an economic crisis when several major banks failed. The International Monetary Fund (IMF) assisted Turkey in the crisis but insisted on various reforms to assure stability.
As a result, Turkey announced a new policy of no longer offering sovereign guarantees to finance future BOT (Build-Own Transfer) power plant construction.
This is expected to make it more difficult to obtain financing for new BOT plants that do not already have their sovereign guarantees.
On January 10, 2001, the Turkish Treasury reconfirmed that they would give sovereign guarantees on only the 29 BOT projects that they had previously committed to.
These 29 BOT projects had been decided at the May 27, 2000 meeting at the Prime Ministry office between the Treasury and the State Planning Organization (SPO).
On January 25, 2001, negotiations on 4 BOTs and 5 TORs (Transfers of Operating Rights) were put on hold, pending investigations by the State Security Court (DGM).
It was announced that the negotiations would not resume until DGM had looked at the Electricity Sales Agreements (ESAs) for the 9 projects.
In late 2000, the Ministry of Energy and Natural Resources (MENR) had also been seeking approval of sovereign guarantees for 35 additional projects, but the Treasury has not agreed to them.
In September 2000, MENR had sought approval of a list of 13 projects, which they sent to the SPO. These 13 projects included thermal and hydroelectric plants with a combined capacity of 2,952 MWe.
MENR had also sent a list of 22 projects to the SPO in November 2000, consisting of 5 thermal power plants, 9 wind power plants, and 8 hydroelectric power plants (see Table 11).
Energy Summary: Because of its limited energy resources, Turkey is heavily dependent on imported oil and gas. There are major oil and gas pipelines going through Turkey and additional pipelines are being constructed or are being planned. There is some production of lignite which is used in power plants and industry.
Turkey estimates that there are potential indigenous sources for 246 billion kilowatt-hours (kWh) per year of electric power generation (105 billion kWh from lignite, 16 billion kWh from hard coal, and 125 billion kWh from hydroelectric resources). Turkey's energy supply in 1996, by fuel type, is shown in Table 1.
Table 1: Energy Supply in Turkey in 1996 by Fuel Type (Estimated)
Fuel Type Percentof Total
Oil 47.4
Coal 25.8
Natural Gas 10.4
Hydroelectric 5.3
Other * 11.1
Total 100
* includes renewables and energy from waste
Source: IEA
An historical summary of Turkey's Total Primary Energy Supply (TPEP) and Consumption (TPEC) is shown in Table 2.
Table 2: Turkey's TPEP and TPEC, 1987-98
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
TPEP (Quads) 0.77 0.80 0.81 0.85 0.87 0.95 0.99 0.95 0.99 1.05 1.05 1.12
TPEP (Mtoe) 19.40 20.16 20.41 21.42 21.92 23.94 24.95 23.94 24.95 26.46 26.46 28.22
TPEC (Quads) 1.67 1.83 1.78 1.97 2.08 2.10 2.33 2.23 2.47 2.70 2.85 2.89
TPEC (Mtoe) 42.08 46.11 44.85 49.64 52.41 52.92 58.71 56.19 62.24 68.03 71.81 72.82
* (M)toe - (million) tonnes oil equivalent; 1 Quad = 25.198 Mtoe (by International Energy Agency [IEA] definition)
Source: DOE/EIA
Oil:
As Turkey's economy has expanded in recent years, the consumption of oil has increased. This growth in consumption is expected to continue at a rate of about 2-3 percent per year. Half of Turkey's energy usage is currently oil, but this proportion is expected to decrease somewhat as natural gas usage increases.
Turkey's oil production is mostly in the Hakkari Basin in the southeast. Approximately 40,000 barrels per day (bbl/d) is currently being produced in Turkey.
Turkey expects that much of its future oil will come from countries in central Asia, such as Azerbaijan and Kazakhstan. The Turkish State Petroleum Company (TPAO) is a partner in oil ventures in these countries.
The flow of oil through Turkey will depend on the construction of pipelines. At this point, the routes to be taken by these pipelines remain unclear. Turkey, Russia, and Iran all have possible paths for pipelines through their territory.
The U.S. has discouraged the use of routes through Iran. Besides pipelines, Caspian Sea oil for Turkey comes via tanker. This requires using the Bosphorus, the narrow strait that connects the Black Sea and the Sea of Marmara. At present, 1.4 million bbl/d of oil goes through the Bosphorus.
Most oil refining in Turkey is done in four large refineries by Tupras, the predominantly state-owned refining company.
Recently, Tupras was partially privatized with 31.5 percent sold to investors for $2.3 billion. There is also one large private refinery owned jointly by Mobil, Shell, British Petroleum, and a local company.
Petrol Ofisi (POAS), the formerly state-owned petroleum distribution company, is now mostly privatized; recently, 51 percent of POAS was sold to investors. POAS currently operates most gas stations in Turkey.
The cost of gasoline to consumers is subsidized to maintain artificially low prices, but these are gradually being increased.
An historical summary of petroleum production and consumption in Turkey is shown in Table 2.
Table 3: Petroleum Production and Consumption in Turkey, 1987-98 (in thousand bbl/d):
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Production (total)* 55 54 60 77 92 88 80 76 71 71 72 69
Production (Crude Oil only) 51 50 56 73 88 84 76 72 67 67 68 65
Consumption 450 447 440 476 468 492 564 540 601 633 634 626
* includes crude oil, natural gas plant liquids, other liquids, and refinery processing gain
Source: DOE/EIA
Natural Gas:
In Turkey natural gas transmission is the responsibility of a state-owned company, Botas (Petroleum Pipeline Corporation). Botas handles oil and gas pipelines, and also has sole authority for natural gas trading.
The 7.3 billion cubic feet (bcf) of natural gas that was produced in Turkey in 1996 met only 2.8 percent of domestic consumption. The rest of the 277 bcf consumed in 1996 was imported either by pipelines or as liquified natural gas (LNG).
Turkey's natural gas consumption is expected to grow rapidly, quadrupling within the next 20 years, with 1,400 bcf consumption projected for the year 2020. Getting this capacity by domestic production would require $4.5 billion in foreign investment over the next 20 years.
Presently, almost all of Turkey's imported natural gas comes from Russia. However, Turkey is trying to diversify its sources, and is considering Turkmenistan, Kazakhstan, Uzbekistan, Egypt, Nigeria, and Iran as possible sources.
Turkey is currently in the process of planning pipelines from Russia, Turkmenistan, and other sources.
Besides pipelines, Turkey also receives imported natural gas in the form of LNG. There is a terminal at Marmara Ereglisi on the Sea of Marmara.
This terminal has the capacity to provide 105 bcf per year of LNG from Algeria. Turkey is also considering LNG imports from Australia, Egypt, Nigeria, Qatar, and Yemen.
An historical summary of natural gas production and consumption in Turkey is shown in Table 4.
Table 4: Dry Natural Gas Production and Consumption in Turkey, 1987-98(in trillion cubic feet):
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Production 0.01 0.00 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.02
Consumption 0.026 0.043 0.114 0.122 0.150 0.164 0.182 0.192 0.248 0.290 0.346 0.370
Source: DOE/EIA
Coal:
Turkey imports over 6 million short tons of hard coal each year, mostly from Australia, the United States, South Africa, and Russia. Coal is used mainly for electric power steelmaking, and cement production.
There is also considerable production of lignite within Turkey, almost 60 million short tons in 1997. About 75 percent of the lignite is used as a fuel source for electric power.
An historical summary of coal production and consumption in Turkey is shown in Table 5.
Table 5: Coal Production and Consumption in Turkey, 1987-98
(in millions of short tons)
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Production Anthracite Bituminous Lignite 51.610.513.8247.28 43.200.663.5938.95 57.570.473.3553.75 52.280.003.3348.95 50.830.003.2047.63 56.690.003.3553.34 53.530.003.1750.36 59.930.003.1356.80 60.630.002.4858.16 62.090.002.6959.40 62.280.002.7659.52 67.460.002.4265.04
Consumption 53.53 50.82 60.20 59.98 63.55 64.66 60.46 65.57 67.14 70.10 74.00 78.39
Source: DOE/EIA
Hydroelectric Energy:
In 1999, Turkey had 108 hydroelectric power plants in operation. Hydroelectric power plants in Turkey currently have a combined capacity of 10,503 MWe and produce 38,016 gigawatt-hours (GWh) annually.
This accounts for about 40 percent of Turkey's electricity demand. The Turkish government hopes to see hydro capacity expanded to 35,000 MWe by the year 2010.
At present, 38 hydroelectric plants with a combined capacity of 4,931 MWe are under construction, representing 15,973 GWh of additional annual energy generation.
Most hydro plants in Turkey are owned and operated by the Turkish State Hydraulic Works -- Devlet Su Isleri (DSI). The Turkish government agency responsible for planning hydro projects is Elektrik Isleri Etut Idaresi (EIE).
Ultimately the construction of 339 more hydro plants are projected for Turkey to make use of the potential remaining hydro sites with a potential of 69,051 GWh per year, which would bring the total number of hydro plants to 485.
This long term plan would bring an additional 19,306 MWe of hydro online at a cost of more than $30 billion.
In February 1998, the U.S.-Turkey joint statement on hydropower projects was signed. It listed nine hydro projects to be negotiated with consortia headed by American firms (see Table 6).
In November 1998, the Ministry of Energy authorized DSI to negotiate the contracts and cooperate with the Turkish Treasury for finalization of loan agreements. As of the start of 2000, the nine projects were in various stages of negotiation.
The negotiations of the first stage (final design preparation) have been completed for the three projects listed at the top of Table 6, Hakkari, Alpaslan II, and Konaktepe. The draft contracts of these three projects are being sent to the Turkish Treasury to initiate financing negotiations.
The consortium headed by Raytheon Infrastructure Inc. plans to build the Hakkari dam and hydro project on the Zap River, a major tributary of the Tigris in southeastern Turkey. EIE had done a feasibility study of the Hakkari project in 1996.
Current plans for the project call for a 207.5 MW power plant to be completed by the end of 2006, which would deliver an average of 625.5 GWh of energy annually.
Long term plans for the Zap River include two more downstream hydro plants to be built later, Doglani at 462 MWe and Cukurea at 245 MWe.
Table 6: Hydropower Projects Under Joint Statement between Turkey and the United States (in thousands of MWe):
Project Name InstalledCapacity(MWe) AnnualGeneration(GWh) Province River Consortium Members
Hakkari 208 625 Hakkari Zap Raytheon, ABB (U.S.)Kiska, Dolsar (Turkey)
Alpasian II 200 714 Mus Murat ICF Kaiser, Harza, ABB (U.S.)Ozasak, Yap, Merkezi, Ekinciler, Su-Yap (Turkey)
KonaktepeI & II 138 579 Tunceli Munzur Stone & Webster, Elin, Voest-Alpine (U.S.)Strabag (Austria)Soyak, ATA ns. (Turkey)
Karg 194 246 Eskisehir Sakarya Black & Veatch, Voest-Alpine, VA TECH Elin (U.S.)Bayandar, Limak (Turkey)
Gursogut 242 276 Eskisehir Sakarya Lemna Int'l, Benham, HDR, Elin, Voest-Alpine (U.S.)Ceylan, AGE(Turkey)
Durak 120 347 Rize Durak Harza, Clark, ABB (U.S.)Dogus, Temelsu (Turkey)
Eric 170 703 Erzincan Karasu Black & Veatch, Clark, Voest Alpine, VA TECH Elin (U.S.)Bayandar, Limak, Temelsu (Turkey)
Pervari 192 635 Siirt Botan Parsons, ICF, Kaiser (U.S.)NTF Insaat, Eren Insaat (Turkey)
Mut 91 270 Icel Goksu Morrison Knudsen, ABB (U.S.)Kolin, EMT, Alsim Alarko, Dolsar (Turkey)
Total 1,555 4,395
Source: DSI
Energy Infrastructure: Turkey is planning to increase its oil and gas pipeline infrastructure to accommodate its increased energy usage. Much of Turkey's future oil supply is expected to come from countries in central Asia, such as Kazakhstan and Azerbaijan.
Several pipeline routes have been proposed, with at least one of them passing through Turkey. It is still unclear what will actually be built.
Turkey is trying to arrange for a western pipeline route that would take oil from the port of Baku in Azerbaijan.
From Baku, the pipeline would go through Azaerbaijan and Georgia and then across Turkey to the Mediterranean port of Ceyhan. Such a pipeline would cost $1.8 billion to $3 billion.
In 1998, Georgia, Azerbaijan, Kazakhstan and Turkmenistan signed an agreement to build an oil pipeline from the Caspian Sea across Georgia and Turkey to western markets.
The line would go from Baku to Ceyhan via Tbilisi in Georgia. These countries also backed a plan to transport natural gas from Turkmenistan and Kazakhstan with a pipeline running under the Caspian Sea to Baku.
This proposed Transcaspian Gas Pipeline would be 1700 kilometers long and carry 16 billion cubic meters of natural gas per year.
It would cost approximately $2.7 billion. The pipeline's proponents hope to secure financing by the end of 2000 and have the pipeline in operation by the end of 2002.
There was an intergovernmental declaration in support of the project in November 1999 by Turkey, Turkmenistan, Azerbaijan, and Georgia. The next step would be a definitive agreement by the four governments. Credit Suisse and First Boston have been appointed financial advisors for the project.
Electricity:
As of December 1999, the Turkish Ministry of Energy and Natural Resources (MENR) reported that electric generating capacity was 26,226 megawatts (MWe). Turkey's electric power consumption is expected to continue to grow rapidly, at approximately 8 percent per year.
This could lead to building a total installed generating capacity of 65 gigawatts (GWe) by 2010, about three times the current capacity. MENR believes this would require investing $3-$5 billion per year. An historical summary of installed electricity generating capacity in Turkey is shown in Table 7.
Table 7: Installed Electricity Generation Capacity in Turkey, 1987-98
(in thousands of MWe)
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Hydroelectric 5.00 6.22 6.60 6.60 6.76 7.11 8.38 9.68 9.86 9.86 9.94 10.10
Nuclear n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Geothermal/Solar/Wind/Biomass 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02
Conventional Thermal 6.22 7.47 8.28 9.19 9.54 10.08 10.32 10.64 10.98 11.07 11.30 11.77
Total Capacity 11.24 13.71 14.90 15.81 16.32 17.21 18.71 20.34 20.86 20.95 21.25 21.89
n/a - not applicable
Source: DOE/EIA
An historical summary of electricity generation and consumption in Turkey is shown in Table 8.
Table 8: Electricity Generation and Consumption in Turkey, 1987-98
(in billion kWhr)
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Net Generation hydroelectric nuclear geo/solar/wind/biomass conventional thermal 40.018.3n/a0.121.6 46.328.4n/a0.117.8 45.917.6n/a0.128.2 55.222.9n/a0.132.3 57.822.5n/a0.135.2 64.726.3n/a0.138.3 71.133.6n/a0.137.4 75.230.3n/a0.144.8 83.135.2n/a0.347.6 91.440.1n/a0.251.0 99.439.4n/a0.459.6 106.741.8n/a0.364.6
Net Consumption 37.7 43.4 43.2 50.6 54.0 60.0 65.8 69.4 76.6 84.9 94.6 102.2
Imports 0.6 0.4 0.6 0.2 0.8 0.2 0.2 0.0 0.0 0.3 2.5 3.3
Exports 0.0 0.0 0.0 0.9 0.5 0.3 0.6 0.6 0.7 0.4 0.3 0.3
n/a - not applicable
generation components may not add to total due to rounding
Source: DOE/EIA
Source:United States Energy Information Administration.
© 2001 Mena Report (www.menareport.com)
