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.
Note: Information contained in this report is the best available as of August 2000 and can change.
With a young and growing population, low per capita electricity consumption, rapid urbanization and strong economic growth, Turkey for nearly two decades has been one of the fastest growing power markets in the world.
Projections by Turkey's Electricity Generating and Transmission Corporation (TEAS), a public company which owns and operates 15 thermal and 30 hydroelectric plants generating 91 percent of Turkey's electricity, indicate that rapid (as high as 10 percent annual) growth in electricity consumption will continue over the next 15 years.
With electricity shortages and blackouts already common (partly as a result of generation and distribution losses as high as 20 percent), increasing the country's electricity generating capacity therefore is a top priority for Turkish energy officials.
If Turkish forecasts prove correct (and some analysts believe that they are too high), Turkey may need to triple its total electric power generating capacity by 2015. According to the Ministry of Energy and Natural Resources (MENR), this would also require investments of $4-$4.5 billion per year, much of which would need to come from the private sector.
A major dilemma now faced by Turkey is how to invest in new electric power capacity while at the same time adhering to foreign debt ceilings mandated under lending rules set by the IMF.
Conventional financing of major infrastructure projects would only increase the amount of foreign credit, thus MENR has conceived other options for financing projects. One option is the so-called Build, Operate and Transfer (BOT) model, under which private investors build and operate private sector generation facilities for a set number of years, at which point they transfer ownership to the state.
First introduced in 1984 by then Prime Minister Turgat Ozal, BOT projects have been plagued by legal problems, which has slowed their implementation. Several BOT plants currently are under construction, including gas-fired units at Marmara Ereglisi and Istanbul, and a $1.6-billion, 672-MW hydro project at Birecik on the Euphrates River (due for completion in 2001).
In coming years, many more power plant projects could be offered to the private sector under the BOT (or possibly an alternative Build-Operate, or BO model), particularly given recent changes in Turkish law which reclassifies power projects as "commercial agreements."
Turkey has extensive plans to increase natural gas use for electric power production. Germany's Siemens AG is leading a consortium of companies in building a $1.45-billion, 1,300-MW, coal-fired power plant near Iskenderun, in southern Turkey.
The plant is scheduled for completion in 2003 and is to burn imported coal. In other news, GE Power Systems is supplying natural gas-fired turbine generators worth more than $900 million for three new combined cycle power plants (the 770-MW Adapazari, 1,540-MW Gebze, and 1,520-MW Izmir plants).
Combined, the three plants are expected to have nearly 4 GW of power generating capacity when they are completed in 2002/2003. GE also reportedly is supplying power generation equipment and services for construction of a $194-million, 206 MW, gas-fired, BOT power plant for Alapi.
This plant is scheduled to enter commercial service in late 2002. Several pipeline projects have been proposed to supply gas to these facilities, as well as several LNG terminals. In addition, Botas is expanding its gas transmission network along the Black Sea and the Aegean.
In addition to increasing domestically generated electricity through construction of new power plants, Turkey is looking outside its borders to help meet the country's rapidly growing power demand. In May 1999, for instance, Turkish and Turkmen officials reached agreement on power supplies from Turkmenistan.
Turkey already is importing 4 billion kilowatt-hours (bkwh) from Bulgaria, and has signed a memorandum with other Black Sea Economic Cooperation (BSEC) members to look into creation of a regional power grid.
Turkey also imports power from Georgia and Iran. Finally, increased natural gas imports will be used largely for electricity generation, with new LNG terminals to be attached to Independent Power Producer (IPP) gas-fired generation facilities.
Turkey has significant hydroelectric power resources (104 total plants, installed capacity of 10.2 GW), and is developing a great deal more, especially as part of the $32-billion Southeast Anatolia -- GAP -- hydropower and irrigation project.
When completed, GAP, which is considered one of the most ambitious water development projects ever undertaken, will include 21 dams, 19 hydro plants (with around 7.5 GW of power generating capacity), and a network of tunnels and irrigation canals. Major Turkish hydro dams include: Ataturk (2,400 MW); Karakaya (1,800 MW capacity); Ilisu (1,200 MW; the largest hydro project on the Tigris River); Cizre (240 MW); Silvan/Kayser (240 MW); Batman (198 MW); and Karkamis (180 MW).
In July 2000, the Turkish government decided to abandon a planned, but oft-delayed, $4-billion, 1,300-MW nuclear power plant. Three international consortia (AECL of Canada, Westinghouse-Mitsubishi of the United States and Japan, and NPI of France and Germany) had submitted bids to build the plant, which would have been Turkey's first nuclear plant.
The project was to have been turnkey and would have been located at Akkuyu, on the southern Mediterranean coast.
Reportedly, the plant was killed for financial reasons, although there also had been opposition from environmental and anti-nuclear groups, as well as neighboring countries like Greece. Prime Minister Ecevit said that Turkey was not abandoning nuclear power completely, and would consider building the plant in 10-20 years, particularly if nuclear technology improves.
Turkey's explosive growth in the mid-90's was not without repercussions for its environment. Economic growth and energy consumption have gone hand-in-hand, and the effect has been an increasing air pollution in cities that are already suffering from high pollution levels.
Although Turkey is beginning to take steps to improve air quality, the increased number of automobiles on Turkish streets is hampering this effort.
Of special concern to Turkey is the threat of marine pollution, especially from oil transport through the narrow Bosporus Straits. The 12-mile passage is already one of the most difficult in the world to navigate, and increased shipping--from oil and gas imports flowing into Turkey, as well as increased Russian shipping from the Black Sea through the Straits to world markets--raise the possibility of an accident.
Collisions in the Straits have resulted in large oil spills, and additional oil shipping from the Caspian Sea region via the Black Sea and the Bosporus puts the Istanbul area at further environmental risk.
Industrial production has meant that Turkey's carbon emissions are on the rise, and Turkey is not a party to the U.N. Framework Convention on Climate Change. Compared to other International Energy Agency countries, Turkey's energy and carbon intensities are low, but per capita energy consumption and per capita carbon emissions are trending upwards.
Turkey has substantial renewable energy resources--especially hydroelectric power--and it is currently constructing a series of dams and hydroelectric power plants. As Turkey looks towards possible European Union membership later in the 21st century, it will need to continue utilizing this cleaner energy as a means to achieve sustainable economic development.
OIL AND GAS INDUSTRIES
State Oil Company: Turkish State Petroleum Company (TPAO)
State Refining Company: Turkish Petroleum Refineries Corporation (Tupras)
State Pipelines and Gas Agency: Botas
State Oil Products Retailer: Petrol Ofisi AS (POAS)
Major Ports: Iskenderun, Istanbul, Mersin, Izmir
Major Oil and Gas Fields: Bati Raman, Karakus, K. Karakus
Major Pipelines: Turkey-Iraq ; Turkey contains 1,078 miles of crude oil pipelines, 1,439 miles of oil product pipelines, and 439 miles of natural gas pipelines
Major Refineries (crude oil capacity): Izmit (226,440 bbl/d), Aliaga-Izmir (226,440 bbl/d), Kirikkale (113,200 bbl/d), Mersin (100,000 bbl/d), Batman-Siirt (22,015 bbl/d)
Source: United States Energy Information Administration.
© 2000 Mena Report (www.menareport.com)