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Energy Issues
The gap in Turkey's energy supply and demand is one of
the key elements which determines its energy policy. As
a country with an emerging and rapidly growing economy,
Turkey is facing a rising growth of its demand for energy
by 8% per annum whereas the world average is 1.8%.
Turkey's energy consumption in 1998 is 76 million tonnes
of oil equivalent (mtoe). It is expected to reach 179 mtoe
by 2010, and 319 mtoe by 2020.
Turkey's demand for natural gas is estimated to rise to
52 billion cubic meters by 2010 and 83 billion cubic meters
by 2020.
Turkey has been pursuing policies in order to meet its
expanding energy need based on diversified, reliable and
cost-effective supply sources.
On the other hand, the Caspian sea region's oil and gas
potential which has been considered a "second north
sea" has attracted much attention. The potential of
the Caspian basin is estimated to be 179-195 billion barrels
of oil and 157-186 trillion cubic meters of natural gas.
The landlocked countries of the Caspian basin work on ensuring
sustainable and continuous flow of revenues from exporting
oil and gas to finance their economic and social development.
Moreover, oil consuming countries and foreign investors
are searching for viable export routes for the projected
production.
Turkey, straddling the Caspian basin and Europe, forms
a natural energy bridge between the source-rich countries
of the Caspian basin and the energy-hungry world markets.
Due to its physical location and being the biggest energy
importer of the area, Turkey casts itself as an energy hub
in its region. Besides, as one of the biggest investors
in the region and its close historical, cultural and economic
ties with the countries of the region, Turkey acts not only
along with its commercial interest but also bears the responsibility
for supporting these nations in their social and economic
development.
In view of the foregoing, Turkey has embarked upon large
infrastructure projects involving transportation of hydrocarbon
reserves of Caspian basin through its territory, namely,
Baku-Tbilisi-Ceyhan oil pipeline project and Trans-Caspian
gas pipeline project. Baku-Tbilisi-Ceyhan pipeline project
which is regarded as a top priority objective for Turkey,
envisages transportation of Caspian basin oil via a pipeline
with the capacity of 50 millon tonnes per annum (mtpa),
to the Turkish port of Ceyhan on the Mediterranean. The
pipeline is planned to become operational in 2004. According
to the feasibilty study conducted by the German company
"PLE", the estimated cost of Baku-Tbilisi-Ceyhan
pipeline is around 2.4 billion dollars.
Turkish pipeline company (BOTAS) is the turnkey contractor
for the construction of the pipeline within the Turkish
territory.
Designed to be the main export pipeline for the Caspian
basin oil, the project for Baku-Tbilisi-Ceyhan main export
pipeline has gained strong support of both the regional
countries and the US. The oil companies have also recognized
its strategic importance.
Furthermore, Baku-Tbilisi-Ceyhan will provide a sound alternative
for Europe, for safe, steady, secure and cost-effective
energy supply diversification.
It constitutes the most environmentally safe, strategically
sound and economically viable route. Turkey thus will facilitate
the requirements for secure transportation of Caspian oil
and gas to the world markets.
Given the fact that currently more than 50 million tonnes
of oil and oil products are being shipped through the Turkish
Straits, potential increase of tanker traffic in the Straits
will pose additional dangers and threats to human life,
the environment, property and navigation safety. Therefore
it is of paramount importance for Turkey and the other countries
concerned to find environmentally safe routes for transporting
Caspian oil. This can only be achieved, without risking
instability, by building the Baku-Tbilisi-Ceyhan pipeline.
Turkey attributes strategic priority to the realization
of this project, which would also facilitate the integration
of Azerbaijan and Georgia with the world economy. Incorporation
of these two countries into the international political
and economic system would help guarantee their sovereignty
and independence, making an invaluable contribution to the
stability in the region.
Azerbaijan, Georgia and Turkey signed the Intergovernmental
Agreement on the Construction of the Baku-Tbilisi-Ceyhan
Pipeline in the sidelines of the OSCE Summit in Istanbul
on November 18, 1999. Turnkey Contract between the investors
and the Turkish national pipeline company BOTAS, which will
be the contractor of the project in Turkey, and a Turkish
Government Guarantee Agreement, regarding the endorsement
of BOTAS's liabilities by our government, the Host Government
Agreements were also signed on October 19, 2000 in Ankara.
The Agreements concluded ensure the commercial viability
of the Baku-Tbilisi-Ceyhan pipeline.
On the same day Istanbul Declaration was also been signed
by the presidents of Azerbaijan, Georgia, Kazakhstan and
Turkey. The former US President signed this document as
a witness. Istanbul Declaration constitutes a firm commitment
of the signatory countries to realize Baku-Tbilisi-Ceyhan
by 2004. It also includes Kazakstan's intention to supply
a significant amount of oil to be transported to the world
markets through Baku-Tbilisi-Ceyhan pipeline.
The Intergovernmental Agreement entered into force on September
10, 2000, after ratification by the respective parliaments.
Basic engineering work on the pipeline started on November
15, 2000. This will be followed by detailed engineering,
starting from March 2001.
Some progress has also been recorded in bringing the Trans-Caspian
natural gas pipeline to life. Running parallel to the Baku-Tbilisi-Ceyhan
pipeline, it will generate economies of scale.
The "Intergovernmental declaration on the principles
for implementing the Transcaspian pipeline" was signed
by Turkey, Turkmenistan, Georgia and Azerbaijan again during
the OSCE Summit in Istanbul on 18 November 1999.
In accordance with the intergovernmental declaration, a
joint committee was established to negotiate the intergovernmental
agreement and host government agreements for this gas pipeline.
The said committee convened in Askabat on 18-20 January
2000.
We are of the opinion that realization of the Trans-Caspian
gas pipeline project will also have political, economic
and strategic implications for the region and present new
opportunities for regional cooperation.
Turkey also signed with Azerbaijan and Georgia a momerandum
of understanding on 18 November 1999, which provides for
mutual cooperation regarding the purchase of Azeri natural
gas by Turkey. A possible cooperation between Azerbaijan
and Turkmenistan for the transportation of Caspian natural
gas to Turkey and further to Europe would increase the benefits
for both countries.
In addition to Baku-Tbilisi-Ceyhan and Trans-Caspian pipeline
projects, Turkey has also been engaged in energy transportation
projects involving Russia. Turkey has been purchasing Russian
natural gas via an overland pipeline through Ukraine, Romania
and Bulgaria since 1987.
Moreover, Turkey and Russia have signed an agreement on
the transportation of Russian natural gas to Turkey via
an underwater pipeline in the Black Sea, known as "Blue
Stream Project".
The Blue Stream Project envisages the transportation of
Russian natural gas from Izobilnoe in Stavropol region to
Jubka port on the Black Sea (397 km), then across the Black
Sea via underwater pipeline to Samsun (396 km) and via an
overland pipeline to Ankara (444 km). According to the intergovernmental
agreement, while the Russian provider Gazprom has undertaken
to build the overland pipeline between Izobilnoe and Jubka,
and the underwater pipeline (Black Sea section of the pipeline).
Construction of the Samsun-Ankara pipeline will be assumed
by Turkey. According to the sale and purchase agreement,
Russia will supply Turkey natural gas gradually ammounting
to 16 bcm annually. The pipeline is due to be operational
by the third quarter of 2001.
The agreement concerning the purchase of natural gas from
Iran was signed on 8 August 1996 in Tehran. According to
the timetable agreed upon by the two countries, Turkey shall
purchase natural gas from Iran for 25 years starting from
2001. The annual purchase amount shall initiate with 3 billion
cubic meters in 2001 and reach 10 billion cubic meters in
2007.
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