6 April 2010

Turkish Energy - Industry Report

Executive Summary

The Turkish energy sector is widely seen as the most promising and attractive investment area in the Turkish economy. The market is experiencing a transition towards a competitive market structure in order to attract private sector investment. The energy market is witnessing rapid growth and a liberalization process with the recent privatizations, licence tenders and strategic partnerships. The sector has been remarkably active recently and offers major opportunities to investors. Turkish energy consumption is low compared to Western European countries. However, the large, young and increasingly urban population in Turkey represents a growth potential. Currently, Turkey is a major energy importer, as its energy consumption growth has outpaced domestic production. Substantial investment in the energy sector will be required in the near future in order to meet the increasing demand in Turkey. The energy consumption in Turkey reached a level of 102 tonnes of oil equivalent, or 1,415 kg of oil equivalent per head in 2008 (which is still below Western levels) with an increasing trend between 2004 and
2008. Given the slowdown in the economy since mid-2008, energy consumption growth slowed from 5.3% y-o-y in 2007 to 1.4% in 2008. The decline is expected to continue in 2009 with a 5.5% decrease; however a recovery of 2.5% annually is expected between 2010 and 2013 . The Turkish electricity market was one of the fastest growing in the world. Installed capacity has continued to rise regularly in the last decade from 23,354 MW to 41,817 MW with a CAGR of 7.8%. As a result of the increase in the share of natural gas fired power plants, natural gas constitutes the highest share of primary energy resources with 39% of the total followed by lignite (30%), hard coal (7%) and fuel oil (6%) in 2008. Turkey’s domestic oil and gas production meets less than 3% of its energy requirement leaving Turkey a
major importer of oil and gas. 90% of Turkey’s crude oil is imported, mainly from Saudi Arabia, Iran, Iraq and Russia. 70% of domestically produced oil is obtained from the state-run Turkish Petroleum Corporation (TPAO) with the remainder produced mainly by Royal Dutch/Shell. As for natural gas, Turkey is dependent on imports from Russia which corresponded to 63% of the total in 2007. Other suppliers include Iran which accounted for 17% and Azerbaijan for 4% of the total. A competitive gas market in Turkey is shaped by the Natural Gas Market Law which was issued in 2001. Accordingly a gas release program was initiated and the transfer of the rights under 4.75 bcm of BOTAŞ’s contracts (14% of actual gas imports) was completed. These rights were acquired by four private sector companies which won the public tender and which have now started gas imports. The State-owned pipeline operator and gas supplier BOTAŞ previously handled all oil and gas import and owns the distribution infrastructure, though its dominant share of the market is planned to be further reduced in coming years in line with the Natural Gas Market law. The share of the private sector in gas import and wholesale activities should thus rise as the share of the State (BOTAŞ) falls. Coal is mainly used for power generation in Turkey. 30% of total primary energy consumption in Turkey is derived from coal. Only one-half of the coal used is produced domestically in Turkey which makes Turkey's coal market dependent on imports. The coal market is considered as largely a monopoly operated by the Turkish Hard Coal Enterprises (TTK) although minor parts of production, processing and distribution
activities are contracted to the private sector. On-going transformation and liberalization of the energy markets has led to increased private investment, from both domestic and foreign investors. There are a great deal of investment opportunities in the Turkish energy sector. State-owned generation and distribution assets are to be privatised, new power plants are to
be built by the private sector, tenders for licences in natural gas distribution are held and certain natural gas import agreements of the state are (as described above) transferred to the private sector. In the past five years, Turkey has accommodated a lively investment environment as many foreign investors have made greenfield investments, entered into partnerships with local players and acquired state-owned and private companies. Turkey has also a significant potential for renewable energy. Due to substantial renewable energy resources and recent developments in renewables legislation and liberalization in the electricity market, there is a suitable environment for renewable investments. The renewable energy sector is further analyzed in ISPAT’s “Environmental Technologies & Renewable Energy Industry Report”.

Sector Overview

Global Sector

Global energy consumption reached a level of 10,465 million tonnes oil equivalent in 2008 with a CAGR of 2.4% between 2004 and 2008. Coal consumption has shown the highest growth in 2008 with a growth rate of 3.7%. Energy exporting regions such as the Middle East and Africa have also experienced growth in energy consumption . However, energy consumption is expected to experience a decrease in 2009 due to the global economic crisis. The fall in the consumption is expected to affect oil, natural gas and coal consumption. Oil has the highest share within the global energy consumption corresponding to 35% of the
total followed by coal, natural gas and hydroelectricity .

Strong growth in demand together with the reduction in spare capacity between 2003 and 2007 has led to rapid growth in oil prices, which culminated in a peak of over US$140/barrel in July 2008 . The peak was followed by even more rapid decline as the impending global recession took shape. From early 2009 onwards, however, oil prices have resumed their upward trend.

Natural Gas
In 2008, the demand for natural gas has started to decline with countries hit by recession reducing their energy usage. This trend continued in 2009. Although the consumption of natural gas was declining, at the same time new gas resources such as liquefied natural gas (LNG) from Middle East and Indonesia have emerged. Despite the global economic downturn, total natural gas production increased by 4.1% in 2008, Russia and the US being the main producers.

Coal production is expected to increase by nearly 60% between 2009 and 2030 with most of the growth expected in China and India . The World’s largest coal consumer is China which is expected to dominate 38% of world capacity by 2011. Another country in which coal is the primary source of energy is India, where 62% of the country’s electricity generation is obtained from coal-fired stations. The demand from these two big coal consumers has shaped the growth in the coal market with an annual increase in global demand of 5% from the beginning of the century .

The nuclear energy industry has become attractive due to the demand of many countries to diversify their energy sources and the high level of alternative energy costs. Russia and France are major players in nuclear power in Europe, where nuclear energy comprises more than 44% of total electricity generation. Concerns over the global warming effect of carbon-based electricity generation, together with concerns over the security of oil and gas supply, have reawakened interest in other countries such as the UK and Sweden. China is planning to construct capacity of more than 20,000 MW by 2015 .

The Domestic Sector

Sector Overview
Turkey is one of the fastest growing energy markets in the world, with significant further growth potential. Turkish energy demand was affected by an economic downturn experienced in Turkey in 2001 but picked up in 2002 and continued to grow thereafter, reaching the pre-crisis consumption level in 2003. The energy consumption increase continued between 2004 and 2008 equalling 102 tonnes of oil equivalent, or 1,415 kg of oil equivalent per head, which is still below Western standards. Together with the global economic crisis, the energy consumption slowed down since mid-2008 with an annual growth rate of 1.4% in 2008, compared to a rate of 5.3% in 2007. The decline is expected to continue in 2009 with a fall of 5.5% however a recovery of 2.5% annually is expected thereafter between 2010 and 2013.

The Turkish electricity market is currently going through a liberalization process and rapid growth. The market is experiencing a transition towards a competitive electricity market in order to attract private sector investment and maximise efficiency. Electricity demand in 2008 equalled 198 TWh, representing 4.3% annual growth from 2007. The CAGR of electricity demand between 2004 and 2008 was 7.2% . Electricity demand has been growing in parallel
with the urbanization and industrialization level and economic development. Also supported by the population increase, the Turkish electricity demand shows great potential for further growth. Electricity demand is expected to be affected by the global economic downturn where there is a 4.7% decrease in the first ten months of 2009. However, there is a sign of recovery in demand in the following months and the demand turns to increase in October by 6.5% .
Installed capacity has continued to rise gradually in the last decade between 1998 and 2008 from 23,354 MW to 41,817 MW respectively with a CAGR of 7.8%. In line with the increase in share of natural gas fired power plants, natural gas constitutes the highest share in primary energy resources with 39% followed by lignite (30%), hard coal (7%) and fuel oil (6%) in 2008 . The current energy supply including the existing power plants, the licensed plants and those under construction was expected to be insufficient to cover the Base Energy Demand starting from 2009 . On the other hand, the decline in economic activity which has affected electricity demand has also delayed the electricity imbalance. After a recovery in electricity demand, there will be the requirement for further capacity to balance supply and demand. The estimated investment required for the period of 2009-2017 is approximately US$ 35-50 bn .
The top 15 generators by installed capacity ranking as of December 2008 are shown in the following table.

The state owned generation company EÜAŞ currently owns c.58% of total installed capacity. Due to the ongoing liberalization process in the Turkish electricity market the state owned generation assets are expected to be privatized Apart from state owned EÜAŞ, the other top players are: ENKA, a leading construction company in Turkey owning the Adapazari, Gebze and Izmir combined cycle gas turbine (CCGT) plants. Isken owns an imported coal power plant and Baymina is the fourth largest player with 798 MW CCGT. Birecik owns one of the largest HEPPs (Hydro Electric Power Plants). There are basically two types of prices in the Turkish electricity market defined as: market prices and regulated tariffs approved by EMRA. A comparison of the system imbalance prices (SIPs) and TETAS whole sale prices is presented in the below chart.

System imbalances prices are set in the Balancing Market where upward and downward regulation offers to cover the long or short position of the market are accepted by the system operator, TEIAS. TEIAS accepts the offers in accordance with the daily demand forecast and daily generation schedule defined on an hourly basis. Prior to July 2008, the gap between regulated tariffs and market prices was high. The Automatic Pricing Mechanism, based on reflecting cost fluctuations onto the energy prices of state owned enterprises was introduced as of July 1, 2008 and had an immediate impact on the TETAS price. The Automatic Pricing
Mechanism affected the TETAS price and the gap started to close. The Turkish electricity markets regulatory structure is as follows: General principles are set by the Law. The
Council of Ministers and/or the High Planning Council make decisions in line with the spirit of the law. Detailed rules are set by secondary regulations and finally detailed operational matters such as tarif approvals and the issuance of licences are defined by EMRA Board Decisions. The Electricity Market Regulatory Authority established as per Law no. 4628 was later renamed the Energy Market Regulatory Authority. EMRA acts as a supervisory and regulatory body for the energy market. These laws aim to establish a stable and transparent energy market functioning in a competitive environment. The market chain can be divided into four sections; generation, wholesale, distribution and retail market (or consumers). There is a monopoly for transmission in between wholesale and generation. The general market value chain and structure is illustrated in the following figure.

Oil & Gas
Turkey’s known oil and gas reserves correspond to 300mn bbl and 8.0bcm, respectively. Oil production is far lower than the estimated consumption of c.673,000 b/d in 2008. Oil comprised c.31.5% of total primary energy consumption in Turkey in 2008, showing a slight increase compared to 2007 (30.2%) whereas natural gas comprised 31.6% of the total in 2008, almost stable compared to 2007 (31.2%). Natural gas prices have risen in line with global prices . Demand for natural gas is increasing rapidly as it is preferred as the fuel for industrial use as well as for power generation. 55.5% of natural gas was used for power generation, 22.5% for residential use and the remaining 22% for industrial use in 2008. Although relatively low compared to others, industrial usage has nearly doubled since the beginning of the decade . The network of the State-owned pipeline operator and gas supplier Botaş covered 63 cities by the end of 2008, increased from 54 at the end of 2007. The improvement in the distribution network is expected to increase natural gas availability. Turkey’s domestic extraction of oil and gas meets less than 3% of its energy requirement leaving Turkey a
major importer of oil and gas. 90% of Turkey’s crude oil is imported, mainly from Saudi Arabia, Iran, Iraq and Russia. 70% of domestically produced oil is obtained from the state-run Turkish Petroleum Corporation (TPAO) whereas the remainder is produced mainly by Royal Dutch/Shell. As for natural gas, Turkey is dependent on imports from Russia corresponding to 63% of the total in 2007. Other suppliers included Iran accounting for 17% and Azerbaijan for 4% of the total . Turkey has a strategic location between European markets and major oil and gas-producing countries in the Middle East and around the Caspian Sea. Although the Bosphorus is a major oil shipping route between the Black Sea and the Mediterranean, heavy oil tanker traffic through the Bosphorus is restricted due to environmental concerns. The legal framework for the EU-backed Nabucco pipeline project was signed by Turkey and four EU transit countries in mid-July 2009. Accordingly, the 3,300-km pipeline will carry gas from the Caspian region and the Middle East through Turkey, Bulgaria, Romania and Hungary to Austria, with the gas further distributed to other EU countries through existing pipelines. The project is expected to reduce the dependence of EU countries on Russian gas .

30% of total primary energy consumption in Turkey is derived from coal. Coal consumption of 92.8m tonnes in 2008 declined by c.2.3% compared to the prior year , whereas total coal production in 2008 amounted to 1586.2m tonnes, up from 76.6m tonnes in 2007 . Hard coal is mainly mined by TTK in Zonguldak in the western Black Sea region. Lignite is mined mostly by the state-owned Turkish Coal Works (TKI) in various parts of the country. TKI controls mining in Afsin-Elbistan located in South-East Anatolia, where most lignite coal is produced.
Only one-half of the coal used is produced domestically in Turkey. This makes Turkey's coal market dependent on imports. The domestic coal market is largely considered as a monopoly operated by Turkish Hard Coal Enterprises (TTK) with minor parts of production, processing and distribution activities contracted to the private sector.

Turkey does not produce electricity from nuclear sources. A tender for building a 1,000-MW nuclear-power plant by 2005 was cancelled in 2000. In subsequent years, a tender was developed for the first nuclear plant with a combined capacity of 5 GW and was announced on September 24, 2008. However, with only one consortium submitting a bid, namely Russia's state-owned nuclear export company Atomstroyexport and Turkey's Park Teknik Group, the tender was cancelled by TETAŞ in November 2009. As the energy demand
grows in Turkey, nuclear energy could provide an important supply source and will remain on the agenda in the coming years.

Main Players

Before the 1990s, a state owned company, the Turkish Electricity Authority (TEK), dominated the Turkish electricity industry. TEK was established in 1970 and in order to move towards market liberalisation and privatisation it was separated in 1993 into TEAS for generation, transmission and wholesale power supply and TEDAS for distribution. In 2001, TEAS was further separated into EUAS for generation, TETAS for wholesale and TEIAS for transmission; each being established as a separate legal entity with the introduction of the Electricity Market Law. EUAS operated 91% of Turkey’s power supply before the electricity reform in 2001 . Most of EUAŞ’s power plants are to be privatized according to the privatization plan.

Oil & gas
BOTAS, the state-owned gas supplier and pipeline operator, handled all gas and oil import and distribution infrastructure until recently. However, its monopoly position is changing from 2009. A competitive gas market in Turkey is shaped by the Natural Gas Market Law which was issued in 2001. According to the Law, a gas release program was started and a tender was completed for the transfer of the gas import rights under 4.75 bcm of BOTAŞ’s contracts (14% of actual natural gas imports). Following the program, the four private sector companies which won the tenders started to import gas and sell it wholesale to major customers in Turkey. In the coming years, further tenders are expected which should reduce BOTAS’s market share in imports to the limit of 20% set by the Natural Gas Market Law as the maximum for any one market player. The private sector’s market share should thus increase correspondingly. The companies which successfully tendered to take over the agreements and their corresponding volumes were Enerco 2.5 bcm, Bosphorus Gas 750 million Sm , Avrasya Gas 500 million Sm and Shell 250 million 3Sm . Bosphorus and Shell have completed the take-over process earlier and have started importing in 2008, whereas Enerco and Avrasya Gas started their operations in April 2009. There are 60 licensed natural gas distribution companies in the Turkish gas market of which 4 are owned by municipalities and the remaining 56 are private companies. The privatization tender for İzgaz was completed; Başkentgaz and Igdaş are to be privatized. Tenders for the remaining cities are planned to be completed by the end of 2011 . 78% of the Turkish fuels and lubricants supply market is controlled by Tüpraş and the biggest fuels retailer in Turkey is POAS, a former state company. BP, Shell and ConocoPhillips are the other active companies . In the petroleum refining market, Tüpraş has a strong monopoly position with 4 sites located in Izmit, Izmir,
Kırıkkale and Batman. Total combined capacity of Tüpraş is over 600,000 b/d. In September 2005, a 51% stake in Tüpraş was acquired by a consortium led by domestic group Koç Holding and Shell Co for US$4.4 billion.Turkey has one non-Tüpraş refinery which is the Ataş plant in Mersin. The plant is owned by BP (68%), Shell (27%) and domestic fuels supplier Turkpetrol (5%) .

Sector Outlook
Driven by high industrialization and urbanization, electricity demand has exceeded electricity production and largely resisted even the global financial crisis. The increase in demand is expected to continue with the population growth and economic development in future and Turkey is expected to outpace its European peers. TEIAŞ projections for 2009-2018 include 4 different scenarios. The high demand scenario accompanied by high capacity has been considered and presented below. There are also three other scenarios with lower demand and capacity estimates. Electricity demand is expected to exceed electricity generation with a CAGR of 7% between 2009 and 2018. The reliable electricity generation is expected to increase by 3.2% CAGR while installed capacity is expected to increase with 3% CAGR in the coming decade. While thermal capacity formed 64% and HEPP 34% of the total installed capacity in 2009, the share of thermal capacity is expected to slightly decrease to 60% whereas HEPP capacity increases to 38% by 2018. The oil import level is expected to rise in line with demand and increasing prices assuming an average of US$ 80 /barrel in Turkey by 2013 . On the other hand, growth in natural gas is expected to exceed petroleum and coal consumption. The natural gas consumption is expected to increase with a CAGR of 7%
between 2010 and 2013. In 2008, coal consumption in Turkey was 92.8 million tons which was mainly used for power generation. Coal consumption in Turkey is expected to decrease by c. 5.5% in 2009 and recover with an increase of 2.5% between 2010 and 2013.

SWOT Analysis


-Well-organized and structured legal framework in the energy sector
-EMRA operating as an independent market regulator
-High growth potential of the Turkish Energy sector compared to other European countries.
-Advantage of Turkey operating as an energy hub between Europe and the Middle East.


-Increase in the weight of the private sector through the privatization of state owned generation assets
-Probable horizontal and vertical mergers of electricity, natural gas and water distribution, to allow synergy and regional utility companies

Natural Gas
-High gas demand growth potential
-Favorable gas supply geography and infrastructure
-Potential role as a transit corridor and potential for development of trading hubs


-Coal is the only energy source with significant domestic availability, leavingth ecountry
increasingly import-dependent

Natural Gas

-Requirement for gas storage for system security reasons

-Import dependence on natural gas supplies



-Privatization of regional distribution companies (to be finalized by 2010) will allow for an independent merchants’ market
-Synergy expected to be created between electricity, natural gas and water distribution
Natural Gas
-Tenders for the remaining cities, gas requirements to be met by end of 2011
-Privatization of municipality owned natural gas distribution companies.
-Restructuring of Botaş and competitive market structure transition to a Interest of foreign investors in the natural gas distribution market.


-No new contract releases are announced/expected in the short term
-Shortage of electricity supply against electricity demand.

Investment Opportunities

Turkey is a major energy importer with energy consumption exceeding its production. For Turkey to meet its energy demand, significant investments are necessary in the energy sector. The transition of the Turkish electricity market to a liberalized market has already attracted private investment from both domestic and foreign investors and further opportunities will occur. Among the investment opportunities, the state owned generation and distribution assets together with new power plant establishments can be indicated. Turkey has experienced a lively investment environment in the last five years in which many foreign investors have made greenfield investments, entered into partnerships with local players and acquired state-owned and private companies. Below is a list of M&A transactions by foreign investors in the Turkish energy industry between 2004 and 2009:

The Turkish government is in the course of privatization of the distribution companies as a step towards full liberalization of the energy market. There are 101 assets with total capacity of 15,594 MW which are to be privatized:

-18 thermal power plants (11,769 MW)
-27 hydro-electric power plants of EUAS (3,677 MW)
-56 run-of-the-river power plants (148 MW)

There are 21 distribution regions under the Turkish privatization portfolio. Kayseri region was the only private region and currently, the privatization tenders for 4 DisCo’s have been finalized, although one has been cancelled by the Council of State. The competitive environment as a result of the privatizations is expected to accelerate electricity generation investments .

b/d - Barrels per day
Bcm - billion cubic meters
BMI - Business Monitor International
CAGR - Compound Annual Growth Rate
CCGT - combined cycle gas turbine
DisCo - Distribution Company
EIU - Economist Intelligence Unit
EMEA - Europe, Middle-East and Africa
EUAS - Electricity Generation Co.Inc.
EUR - Euro
GDP - Gross Domestic Product
HEPP - Hydro Electricity Power Plant
IEA - International Energy Agency
ISE - Istanbul Stock Exchange
ISPAT - Republic of Turkey Prime Ministry Investment Support and Promotion Agency (ISPAT)
KCETA - Kayseri Region Electricity Company (Kayseri ve Civarı Elektrik T.A. )
LNG - liquefied natural gas
OPEC - Organization of the Petroleum Exporting Countries
PED - primary energy demand
Rmb - Chinese yuan
US - United States
US$ - US Dollars
TEAS - Turkish Electricity Generation and Transition Co.
TEIAS - Turkish Electricity Transmission Company
TEK - Turkish Electricity Authority
TETAS - Turkish Electricity Trading Company
TPAO - Turkish Petroleum Corporation

Turkey – China: Towards onto an Energy Partnership - Abdülkadir Emin Önen

An energy partnership agreement signed between Turkey and China while the Turkish President Abdullah Gül’s visit to China. A new era has been started between Turkey – China relationship with the signing of this agreement which can be seen in the analysis of the agreement below.

Memorandum of Understanding on Cooperation in the Energy Sector which was signed between Republic of Turkey, Ministry of Energy and the National Energy Administration of the People’s Republic of China is primarily a cooperation memorandum. Cooperation areas and route map of Turkey – China partnership had been decided. According to the memorandum:

Proposed Cooperation Areas

1. Renewable Energy
2. Energy conservation and energy productivity
3. Rehabilitation of transformer substations and hydroelectric power plants jointly
4. Manufacturing electricity generation systems for the utilization of renewable energy sources such as wind, solar, small water sources etc.
5. Hydrocarbon exploration and production
6. Mining Technologies
7. Boron Technologies
8. Production of solar energy equipment
9. Thermal power ( coal, oil and natural gas as power)
10. Hydroelectric Power Plants
11. Nuclear Energy

This memorandum of understanding consists of 6 articles and it bases on the parties’ agreement to encourage their enterprises to discuss possibilities for bilateral and mutually beneficial cooperation in the energy sector in line with applicable laws and regulations of both countries. Memorandum of Understanding has a constructive property.

Importance of the Memorandum of Understanding

MoU is important edge point for Turkish Foreign Policy and Turkey’s Asian Policy since the year 2003 but firstly it is important for bilateral relations of Turkey and China. Turkey formulated a new strategy towards Asia which is based on a economy – energy survey during the Justice and Development Party Government. Trade volume between Turkey and Asian Countries increased by 25% -30% between 2003 - 2009, this is a clear success of the new strategy of Turkey. Also Turkey’s interest is so much increased towards the Asia according to the Turkish Government visits to Asia. These visits do not only arranged for strengthen the diplomatic relations, they also have concrete results such as signing of Memorandum of Understanding. This MoU was signed during the President Abdullah Gül’s visit to China at 23-29 June. This was the first presidential visit to China after the Demirel’s visit in 1995.

Important points come forward when interpreting the Turkey’s Energy Policy during Justice and Development Party Government. It should be underlined that Turkey is no more developing strategies on basis the of being an energy bridge but Turkey focuses on becoming an energy corridor and being a thermal country. Turkey is not only concentrating on becoming an energy corridor on east-west direction, Turkey also developing strategies to become a multidirectional energy corridor which includes north – south direction just like general Foreign Policy Strategy of Turkey. Turkey aims to become a global actor on energy with taking parts at the regional and global energy projects.

Turkey – China Relations

To understand the China’s importance for Turkey, it should be stated that China is the biggest trade partner of Turkey in the Far East and China is the 3rd country within the Turkey’s import ranking. Trade volume between Turkey and China is increased by 40% in 2008 in spite of the global financial crisis. In 2002, Turkey’s trade volume with China was $ 1.4 billion dollars, this trade volume is increased by 7-8 times and it is $ 14-15 billion dollars today. Briefly this MoU is signed in accordance with the developing economic relations between Turkey and China.

This MoU is expected to strengthen the development and diversification of Turkey – China relations on a collaboration perspective. This collaboration memorandum will be a step on bearing Turkey – China relationship to a strategic level in the future. Turkey – Russia relations is a good example for proving the fact that developing energy-trade relation has a significantly positive affect on the development of political relations. China which has veto power in UN Security Council, has a potential for being a superpower in the near future. Cooperation between Turkey and China on politics become a stronger possibility by the development of energy cooperation between Turkey and China.

On the other hand, China will invest to Turkey according to the MoU and these investments will help Turkey to meet the deficits of Turkey-China trade relation. According to the Chinese Perspective, energy cooperation with Turkey and designation of Turkey as a strategic base (after the Turkey President Gül’s signing of a agreement on establishing a investment base in Turkey with Chinese Huawi Company) will be an important boost for developing China’s Middle East Initiative. Turkey’s cooperation with world’s potential superpower China in Middle East is not only an issue of energy sector, it also provides important advantages in world politics for Turkey.


Energy Memorandum Article is a turning point for bilateral relations of Turkey and China in general and it is also a turning point for energy relations in private. Countries which can provide energy security will be the main actors of international politics according to the energy security aspect. This Memorandum is a milestone for providing Turkey’s energy security. China investment to energy sector of Turkey, is an important contribution to efforts on satisfying Turkey’s energy need and proving Turkey’s energy security. Chinese investment of renewable energy and nuclear energy will give the ability of multiplying energy sources for Turkey. Energy is becoming the most important cooperation issue between Turkey and China in this sense. Cooperation on producing energy with China is strategically beneficial for Turkey. Turkey – China energy cooperation is based on the strategy of bilateral cooperation and win – win approach. Benefits which will gained through energy cooperation in the future will give positive opportunities to both state and individuals.

Turkey’s Policies for New and Renewable Energy - Emin KORAMAZ

Energy has a strategic dimension in international policy, dilemma and conflicts. If we consider together the 9/11 attacks, the invasions in Iraq and Afghanistan, the present crisis and developments in the world energy market, we can see that tendencies in energy issues are headed far from peace and prosperity, that delays are possible in investments and that these problems may be intensified.

An important rise in fossil fuel prices is also expected due to the difficulty of satisfying the world’s rising demand for petroleum. In global politics cheap oil and natural gas is going the way of history.

Accepting existing developments as they are and developing policies in increasing uncertainty will not prevent energy related problems and social disturbances. As a result, we should not be fooled by recent factors such as the 5% decrease in Turkey’s demand for electricity. In reality, over the last five years, Turkey’s primary energy consumption increased 35%, and its electrical energy consumption increased 43%.

Meanwhile, our country’s dependency on foreign energy has reached 75%. Only 25% of our total energy consumption (the equivalent of 107 million tons of petroleum) is being met by local production. We can say that Turkey’s 93% dependency on foreign oil and 97% dependency on foreign natural gas will continue.

Our energy loss in industry is at least the equivalent of 6 million tons of petroleum. Our country’s conservation potential is over 25%. By exploiting the 25-30% energy conservation potential in decisive sectors it is possible to save 5 billion dollars. It is possible to reduce the share of the energy cost within product cost in manufacture, which varies from 8 to 50%.

The main reason that problems have reached such a scale is that the public service energy production is seen as a market activity, and this is not a strategic planning approach. The cause is the division, downsizing and dysfunctionalization of public enterprises in the energy sector by means of privatization and liberalization policies implemented over the last 30 years. It is due to the encouragement of electric plants that depend on imported natural gas and to the failure to improve, maintain, repair and increase the capacity of our lignite fueled and hydroelectric plants because of commercial promises made to the natural gas plants. It is due to the failure to utilize adequately our rich lignite reserves, hydraulic resources, new and renewable energy sources such as wind, geothermal and solar. However, it is possible to change this situation. Our suggestions regarding this issue are below.

Suggestions for Necessary Steps in the Renewable Energy Sector

1. “The Draft Law on Supporting the Use of Renewable Energy Sources for Electrical Energy Production” should be revised and submitted to the parliament for ratification.

• The restructuring of the renewable energy legislation can be enabled by an integrated general framework law, a “renewable energy strategy and action plan” and a “Turkey general energy document and action plan,” prepared with the participation of universities, professional organizations, expert foundations and industrial institutions, taking market failures in consideration. Strategy documents and secondary legislation that covers incentives for each investment type such as hydraulic, thermal, wind, solar and geothermal should be separately prepared and 2020-2030-2050 targets should be identified for each resource.
• Plans, strategies and targets for the electrical energy sector should be determined, and incentives should especially target R&D and local production. Development of local industries and employment in renewable energy sector should be supported in planning.

• The productivity standards of each resource should be determined in order to prevent importing unproductive technologies, inefficient use of resources and the formation of technological junkyards. The world’s beneficial and productive technologies should be encouraged considering the minimum productivity of the technology to be used (turbine productivity, panel productivity, system productivity, etc).
• Inventories of the locations of future plants should be prepared ahead of time, making sure that these locations do not overlap with land uses such as agriculture and urban development.
• A production-consumption plan should be made that minimizes transport and distribution losses.
• If transport/distribution of the produced energy is obligatory, relevant institutions should determine existing limitations of the infrastructure ahead of time.
• Project feasibility reports should be the basis of production license grants.
• The secondary legislation to be prepared should be clear and based on objective criteria.
• In order to prevent confusion, investments should begin after the legislation is in effect.
2. In order to raise awareness concerning the use of renewable energy resources, pilot projects should be implemented in all provinces/towns, with public guidance and contributions from professional organizations, universities, government institutions and local governments.
3. It will be a more realistic structure if ETKB follows its actual functions including licensing, technically monitoring and contracting new investments in the energy sector, and EPDK to return to its role of regulation, monitoring and determining flow up investments.
4. The downsizing, dysfunctionalization and privatization of public enterprises in the energy sector should cease and public enterprises should be strengthened. BOTAS and TPAO should be reunited under Turkish Petrol and Natural Gas Institution in order to continue natural gas and oil search, production, transport, refinery, distribution and sale activities in an interated manner while EUAS, TEIAS, TEDAS and TETAS should be reunited under Turkish Electric Institution (TEK) so that electric production, transport and distribution activities are integrated.
5. The main principle of energy production investments should be the minimization of environmental damage. Environmental impact assessment reports and EPDK licence details should be transparent and ‘EIA Appropriate’ documents should be prerequisite for licences to be granted. Investment licences should be cancelled if previously licensed investments fail to get EIA documents or if previously given EIA documents are cancelled. In applications to renew EIA reports or EPDK licences, fuel changes, especially from coal to imported coal, and extensive capacity increases should not be permitted.
6. Liquid bed technologies should not be used in coal fueled plants and it should be obligatory to have chimney treatment facilities and high efficiency filters in existing and new plants. Air cooling systems should be used in natural gas fueled plants, rater than water cooling systems that diminish already limited water resources. Necessary revisions and capacity improvements in thermal plants should be finalized rapidly, idle capacities should be utilized, technical productivity and readiness of coal based thermal plants should be increased, and measures should be taken to reduce pollution. Privatization of plants that have been rehabilitated by public finance and contracting rehabilitation works to unqualified foreign firms should be stopped.
7. Investments toward reducing loss and piracy in electricity that is around 15% should be made rapidly, legal regulations on conservation and efficiency should be made.
8. Continuing public hydraulic plant projects should be finished by allocating necessary resources. EPDK should monitor the meeting of the construction deadlines it licensed. The importance of this issue is illustrated by the fact that only one of every five hydraulic plant projects licensed by EPDK has investment realization above 35%.
9. The grid connection and system balance of wind plants should be technically investigated, problems should be resolved by R&D support if necessary.
10. The existing capacity for electricity production (500 MW) from geothermal sources should be utilized, tens of thousands of homes should be heated with geothermal water, and the prioritization of the use of geothermal resources for centrally heating dense urban settlements should be obligatory.
11. A legal foundation for the utilization of the solar power potential should be established, secondary legislation should put in to effect according to this law, determination of solar power production technology level, the scope of R&D activities, methods, pilot facilities, production facilities, manufacturing and assembly stages should be planned. Local production of Photovoltaic cells and condensing systems should be aimed.
12. Decrees on norms, standards, minimum performance criteria and procedures for architectural design, heating/cooling needs and equipments, insulation needs and materias, electrical systems and lighting should be prepared by EIE, Ministry of Settlement and public works and professional organizations, put in effect and implementation should be monitored.
13. The number of academic research institutions such as TUBITAK and Marmara MAM should be increased. Research centers should be established for: solar energy technologies in Mugla, Adana, Mersin and Harran universities; lignite/coal burning technologies in Afsin Elbistan; wind plants in Izmir and Canakkale; geothermal energy in the Aegean region; hydraulic energy in southeastern Anatolia, and biofuel in Cukurova and the GAP region.

The EU’s Energy Politics - Dr. Dimitris Tsarouhas

The Lisbon Treaty is meant to usher in a new stage in European integration. The smooth functioning of the institutions, new bodies to coordinate policy and a better decision-making process are its main accomplishments. How these will translate into policy practice is uncertain. For the time being, enthusiasm is limited due to intra-institutional squabbles and the failure of the Union to inspire its citizens.
This was not always the case. Over the 1980s and for a large part of the 1990s, the European Union became the focal point of innovative politics the world over. The main reason was the realistic and at the same time idealistic decision of its member states to pool their sovereignty in economic affairs and create the world’s largest single market.
Today, however, intra-state antagonism is on the increase and intergovernmentalist considerations prevent closer cooperation. Energy politics is a case in point, precisely because dependence on oil and (especially) gas is so varied among EU member states.
In what follows I start with reviewing how the single market became possible before discussing Europe’s energy politics agenda. I conclude by arguing that European synergies on energy politics are needed if the Union is to match its economic clout with geopolitical power. The ratification of the Lisbon Treaty could be a step in that direction.

Forming a Single Market
The signing of the Single European Act in 1986 was a historic step forward in the institutional development of the Union. Apart from modifying the Treaties that had created the European Communities, it also ‘brought major cooperative arrangements more firmly within the framework of what may be termed the Community process’ and granted new decision-making powers to the Council of Ministers and the European Parliament.
In addition, the SEA incorporated into the Rome Treaty the concept of cooperation in economic and monetary policy and paved the way for EMU. More importantly, the SEA signalled the willingness of Europe to reform and expand its institutional machinery to face off the economic challenge of the United States and Japan, whose competitive advantage had grown over the previous decade. In all these respects, the SEA proved the crucial turning point in the history of European integration. It was the brainchild of an activist Commission, put in place under the leadership of the French Socialist Jacques Delors. Delors wished to mark a new beginning for the Community, whilst at the same time empowering the marginalized Commission. The Single European Act is therefore the one piece of legislation that unlocked Europe from past inertia and introduced the legislative conditions enabling the Community to move beyond a predominantly intergovernmentalist perspective.

Gas Supply and the Russia factor

There is a marked difference in the oil and gas markets. While the former functions pretty much on the basis of predictable prices and pretty secure supply, gas supply is very much depended on pipelines due to the nature of the product. The logical consequence of that is that gas supply becomes enmeshed in geopolitics and the relative power leverage the Union can have vis a vis its main suppliers.
Russia is here the world’s most important player as it is the largest producer of natural gas and has the largest proven gas reserves. The Union, by contrast, produces only one quarter of what it consumes. For the foreseeable future, the EU will be dependent on Russia and the question that emerges is how this relationship can be managed to avoid conflict and secure supply in the long term.
What is the main goal of the EU at this moment in time? The Union has declared that it wishes to establish a ‘balanced’ partnership with Russia on the issue and has been asking for the renewal of the PCA, the Partnership and Cooperation Agreement between the two sides. The original agreement dates back to 1997 and is the framework within which bilateral trade relations are managed. Energy relations are but one of the items on this agenda and the negotiations between the two sides are ongoing. The PCA therefore addresses the issue of energy though it is by no means limited to it.
The 2009 Russia-Georgia war cast a shadow over EU-Russia relations, and it revealed that the Union remains deeply split on the issue. While some countries (mostly CEE states) push for a tough stance towards Moscow, old and powerful member states wish to maintain good relations with Russia, even at the cost of disappointing some new entrants. Furthermore, it is important to stress that not all EU member states are exposed to the Kremlin’s ability to control gas supplies in Europe to the same extent. In fact, member states such as Spain have no dependence on Russia whatsoever, and can therefore make their policy calculations regarding Moscow in a markedly different way compared to the Baltic states or Poland, whose dependence on Russian gas is absolute.
What is certain is that Russia is well aware both of EU divisions on the subject and its own ability to influence western policy. The prominent role of Gazprom, aided by the Kremlin, is no coincidence. What is Russia’s objective on this issue?
Russia’s dominant position in the vital gas market and the pipeline diplomacy necessary to achieve stability in supply means that Russia has been able to use its position for political reasons. This, in turn, is part of the larger Russian narrative of grievance and the insistent complaints levelled towards the west for the way it sought to exploit Russia’s weakness in the early post-Cold War era. The chaos of the time has left its mark on Russia’s attitude towards the west and suspicion has been ripe for quite some time. Following Putin’s arrival to power, that grievance manifested itself in a new type of neorealist policy towards the west. Disrupting gas supplies for a brief period in 2006 was a warning shot. In early 2009 Russia stopped supplies to Ukraine over a payment dispute leading to a (literally) frozen landscape across much of Eastern Europe for two long weeks. Europe is currently busy financing various gas and electricity projects to prevent a future supply crisis in an attempt to insure itself against unpredictability and pipeline politics.
The EU claims that securing supply diversity is a key priority and has therefore backed projects such as Nabucco, a project aiming at delivering Caspian gas to Austria from Turkey thus lessening dependence on Russia. Despite the signing of the Intergovernmental Agreement on the project in July 2009 and its recent parliamentary ratification by the Turkish Parliament (the countries involved including transit are Turkey, Bulgaria, Romania, Hungary Austria) question marks remain s to the efficacy of this private-sector project, the amount of gas secured and the alternative routes mapped out. Moreover, Nabucco’s rival, the Kremlin-backed South Stream that will deliver gas from Russia to Europe via Bulgaria, Greece, Serbia and Croatia to Italy. In August 2009, Russia and Turkey agreed that the proposed pipeline will be able to pass through Turkish territorial waters. Russia and the EU both deny the alleged rivalry between the two projects. These are but two of the prominent examples highlighting the role of pipeline politics in the context of EU-Russia relations as the old continent is scattered with plans and ongoing pipeline projects all scrabbling for security and good positioning in the gas match.
The American factor should not be left outside completely. Russia’s actions in Georgia and its behaviour in what it sees as its ‘near abroad’, especially Ukraine, highlight its intense displeasure from US-backed initiatives to incorporate those countries into NATO (similar to what happened with CEE states earlier). The recent NATO Summit in Bucharest provided further evidence of many EU states’ unwillingness to sacrifice a level-headed political relationship with Russia for the sake of NATO expansion in former Soviet territory. Whether this policy can be reconciled with the alleged willingness by Brussels to push the Kremlin on its human rights and civil liberties record is a different question. Meanwhile, the realization that all three (US, Europe, Russia) need each other in the face of challenges such as the Iran question leads many to predict a soothing of relations in the near future. Following the Russian-Georgian war and the tension this was accompanied by, EU-Russia relations already seem to have been stabilized again. Meanwhile, the US and Russia are close to a very hopeful, new nuclear treaty to halve the number of their nuclear stockpiles. Obama’s arrival to the White House is already producing visible signs of improvement in US-Russian relations.

Conclusion: EU Energy Politics and the Lisbon Treaty
Last December, the Lisbon Treaty finally came into effect. After a decade-long process of soul-searching, failed referenda and endless arguments about integration, the Union now has a better tool to address global policy challenges and coordinates the work of its institutions more effectively.
Energy is explicitly mentioned in the Treaty and that is a first for such a document. More importantly, energy policy has shifted away from unanimity voting towards qualified majority. This should in theory make it easier for the Union to reach quick and effective decision on energy. Solidarity on energy supply is pledged by Brussels to member states and that is a gesture to countries that have been affected by the recent crises mentioned above. If it is more than a token gesture remains to be seen.
A common energy policy is now an official EU objective. Pipeline politics reveal that this may still be a far-fetched goal. Lisbon, however, has brought it a tiny step closer to reality. For the sake of European integration, energy constitutes a vital policy area where new initiatives can pave the way for integration.

Supply Perspectives of Russia Kremlin Winking at NABUCCO - Özer Çetinkaya

It was not expected that increase of production, growth and prosperity would arise Russia again. This period which was started with the collapse of USSR, had reached its peak with the increase of oil prices by the impact of US invasion of Afghanistan and Iraq. Moscow government made a strategic decision in 2000. Control of Russian economy should be transferred to the state solidly. Economy had transformed to a new system which is based on raw material exportation. Investments were slipping towards EU member Eastern Europe and Pacific. Energy demand in these region was expected to increase slightly per year. Besides all these, Russia stands in the middle of EU and Pacific and Russia controls the energy valve. Plan was worked well in the last 10 years. Russia embraces Europe with its strong claws like a grown-up bear and it challenges Atlantic Alliance. If Moscow is the body and Kremlin is the brain of this bear, GAZPROM and LUKOIL are the claws of this bear.

Europe and Russia

Europe and Russia are onto forming a strategic partnership since the US invasion of Iraq. This progress is leaded by Germany. The basic element of strategic partnership is economics actually and energy has the main role in the economic cooperation. Europe is importing %40 of its natural gas from Russia. 2/3 of Russian gas export is with Europe. EU also imports the 1/3 of its oil demand and ¼ of its coal demand from Russia. European companies are the main investors at Russian oil, gas and electricity sectors. Russian energy giants’ role in European Markets is also rising. Mutually and strongly developed European – Russia relations in recent years disturbs Washington. Washington brought up the threat of dependency to Russian energy for Europe. Arguments brought by Washington are stated as the vital for EU:

- Moscow is using energy as a political weapon.
- Russian companies do not invest on new areas.
- Russian companies have a tendency towards Asia.

Russian energy policy and supply perspectives are more likely to aiming at gaining economic power than gaining political power. Russia will become a bigger power by economic income. It means the Russia’s becoming a global, independent power in the conditions of 21st century.

Is the Islamic Countries True Choice?

What is the meaning of spreading Russia frighten among Europeans? EU had given a long list of duties. Decreasing the state role in Russian oil and gas market is the first duty on the list. Concerns of Europe are not derived from Moscow, main source of these concerns is Europe itself. Enlargement towards eastern countries was the role for EU which was designed by Atlantic Alliance. Atlantic bounded European Countries lost their ability of strategic thinking while they are trying to understand their role. EU preferred to trust far Islamic countries energy instead of establishing an energy partnership with Russia. Ambiguities like invasion of Iraq and Iran’s future helped Europe to see their strategic mistake. EU steps seems to be the efforts for fixing the strategic mistake by tactical steps.

Will Kremlin Participate to NABUCCO?

What if Russia does not have a desire to produce more natural gas? This question is an argument brought for scaring Europe in fact. For supporting this question, decrease of Russian oil produce which was had a growth capacity of 8% for years, since 2007 is stated as evidence. Situation may seem like this when looking at it for one, but it should not be forgotten that 2007 global economic crisis is still effective. Economies are shrinking and countries such Greece and Spain are in the edge of bankrupt. Even there is a positive movement in global economy in 2010; its reflections can only be seen after 2011 on Russian energy production. Demand decreasing also decreases the energy prices. Russia’s response would be a decrease in production. Gazprom will continue to be the leader in the gas production with its financial power and with its ability of strategic planning. Gazprom will reach till the North American market with its LPG raid. Two main issues will determine Russia’s energy strategy in the future:

1- Participation to NABUCCO
2- Partnership with China in big projects.

Germany requested Kremlin to participate NABUCCO project in senior level. This request shows the tactic change of EU which is problematic with finding gas sources. Kremlin has not decided yet. Attitude of Azerbaijan and Turkmenistan will be effective on this decision. If Azerbaijan and Turkmenistan decide to develop cooperation with Russia, Russia will accept to participate NABUCCO. Russia advanced to be a real alternative for Azerbaijan. Azerbaijan assumes the rising in Europe as the most important potential strategy so Azerbaijan desires to canalize its consumers to put pressure on Turkey. Natural gas which will reached to Russia by Azerbaijan is 500 mcm per year. This amount does not make Azerbaijan advantageous. Azerbaijan’s other neighbor Iran demands gas in winter months especially Northern Iran. Turkmen gas meets the Iran gas demand already. New pipeline which was started operating, is enters Iran through Devletabad. This pipeline and Körpece-Kurtköy pipeline can provide 14 bcm of natural gas per year. This capacity may increase to 20 bcm. Also Azerbaijan exports natural gas with advantageous conditions. With the agreement which will be active until 2013 1.5 mcm of natural gas per day will be transferred to Georgia. Subject of extending the agreement is another issue. All these issues bring up the GAZPROM as a real alternative for Azerbaijan.

New Plans of Russia

Moscow prefers to establish partnerships with local energy distributors to ensure Europe’s trust instead of increasing energy production. Situation is same in the Asia-Pacific region too. Studies on huge projects continue by the association of GAZPROM and China. Fundamental issues in Russia’s new strategy proof this point:

a) Diversifying export market.
b) Diversifying product application areas.
c) Focusing on Asia.

Under those conditions Europeans should look forward to sign long term supply agreements instead of concerning about energy dependency to Russia. Russian entrance understood as a new threat for Europe. In fact, Russia’s partnership with Nigeria, Algeria and Libya provides new options to overcome increasing demand of Europe.

Box – 1
NABUCCO – South Stream Comparison

6 NABUCCO countries have an import amount of 80 bcm per year. Russia established a 900 km long pipeline project called South Stream which is passes through 2000 m deep of the Black Sea and connects to Bulgaria gas network. South Stream pipeline will divide into two directions. One direction will reach Austria through Serbia-Hungary route and the other direction will reach to Italy through Greece. Italian ENI company is an important partner of Russia in this project. NABUCCO country Hungary is also participating South Stream project. Kazakhstan and Turkmenistan which does not have a tendency to provide gas to NABUCCO, signed a gas agreement with Russia for South Stream Project. South Stream’s capacity will be 30 bcm/year in the beginning then capacity will increased to 63 bcm/year. South Stream does not have problems such as providing gas and it will be finished before NABUCCO in 2015.

Box – 2

Supply-Demand Expectations for EU


2015 614 bcm 282 bcm 332 bcm 250 bcm

2030 694 bcm 217 bcm 467 bcm

Box – 3

Production Strategy of Russia

Expected oil production in the Russia’s 30 year plan for energy is 490-520 million tons. 200-215 million tons of this production will be expended by internal consumption. 100-105 tons are planned for Asia-Pacific region. 30-35 million tons of the rest will be reserved for Commonwealth of Independent States. The rest 150-160 million tons above the amount sold to Europe in 2001; 181 million tons.

Source of Conflict and Life: Energy Future of Iraq - Volkan Güner

Planning and managing an energy future is a hard quest for a country like Iraq. Iraq is in a conflict zone which maintains various religious and ethnic groups. Conflict in the country is based on political, ethnic and economic problems. Especially after the US invasion in 2002, Iraq energy resources became a bigger question for the sides of this conflict. Iraq is expected to have stability after the elections held in March 7th, 2010. There are also some analysts who state that after the elections and US army withdrawn from Iraq there will be a state of conflict. The attacks and deaths on the Election Day can be understood as signals of an upcoming civil war in Iraq. All these issues will strongly affect the energy future of country. For understanding and interpreting the situation of energy, Iraq’s energy evolution should be examined, especially situation on oil and natural gas.

Iraq was the world’s 13th largest oil producer in 2008, and has the world’s third largest proven petroleum reserves after Saudi Arabia and Canada. Just a fraction of Iraq’s known fields are in development, and Iraq may be one of the few places left where vast reserves, proven and unknown, have barely been exploited. Iraq’s energy sector is heavily based upon oil, with approximately 94 percent of its energy needs met with petroleum. According to the International Monetary Fund, crude oil export revenues represented over 75 percent of GDP and 86 percent of government revenues in 20081.

Sanctions undermined Iraq’s oil sector and Iraq’s oil infrastructure needs to be reformed. US allocation of $ 2.05 billion to Iraqi oil and gas sector started a kind of reformation but it was ended in 2008. In 2009, Iraqi budget accepted $ 3.2 billion allocation to Ministry of Oil it was a %50 percent increase from the 2008 base budget. US government agencies reported that Iraqi reconstruction of oil, gas and electricity sectors cost $ 100 billion or higher. International oil companies are expected to be aided according to the Hydrocarbons Law in accordance with their investments.


Oil and Gas Journal announced that Iraq has oil reserves which contain 115 billion barrels but statistics have not been revised since 2001. In the unexplored territories of Iraq (western and Southern Deserts) there may be additional coverable oil of 45 to 100 billion barrels.

One of the main problems on oil is the division of resources across sectarian demographic lines. Hydrocarbon resources are mostly found in the Shiite areas of the South and resources of Northern Iraq which is ethnically Kurdish is controlled by Sunni minority.

Eastern edge of Iraq is known as the oil and gas depot of the country. There are 9 fields which are called as “Super Giants” (over 5 billion barrels) and there are 22 fields which are known as “Giant” fields (over 1 billion barrels). Southeastern Iraq contains the largest known concentration of such fields. This region also has the 70 to 80 percent of the Iraq’s proven oil sources. 20 percent of oil resources are located in the north of Iraq, near Kirkuk, Mosul, and Khanaqin. This area is controlled by the Kurds and other groups living in that region.

Oil Production

State owned oil companies were producing oil at an average of 2.4 million barrels per day. In 2008, production was 2.1 million barrels per day in 2007. Pre-war production capacity level still not reached which was 2.8 million barrels per day in 2003. Nearly 66% of the production comes from the southern fields. Actually, three giant fields are the major production areas: North and South Rumelia and Kirkuk.

Currently, the Ministry of Oil has central control over oil and gas production and development in all but the Kurdish territory through its three operating entities, the North Oil Company (NOC), the South Oil Company (SOC), and the Missan Oil Company (MOC), which was split off from the South Oil Company in 2008. According to the NOC’s website, their concession and jurisdiction extends from the Turkish borders in the north to 32.5 degrees latitude (about 100 miles south of Baghdad), and from Iranian borders in the east to Syrian and Jordanian borders in the west. The company’s geographical operation area spans the following governorates: Tamim (Kirkuk), Nineveh, Irbil, Baghdad, Diyala and part of Babil to Hilla and Wasit to Kut. The remainder falls under the jurisdiction of the SOC and MOC, and though smaller in geographical size, includes the majority of proven reserves. MOC's oil fields hold an estimated 30 billion barrels of reserves. They include Amara, Halfaya, Huwaiza, Noor, Rifaee, Dijaila, Kumait and East Rafidain.


Iraq government aims to increase oil production by 300.000 barrels per day 70 2.7 million barrels by the end of 2010. Crude oil production capacity is expected to become 1.5 million barrels per day within 3-4 years and by an additional 2 million barrels per day to a total of 6 million barrels per day within 10 years according to the Iraq’s 10 year strategic plan (2008-2017). As part of this plan, Iraq planned three licensing rounds. The first was announced June 30, 2008, and included plans to rehabilitate six giant producing fields with reserves of over 43 billion barrels. These contracts were planned to be awarded by mid-2009. The second bidding round was announced in December 2008 for fields that were explored but not fully developed. Iraq also plans to sign delineation agreements on shared oil fields with Kuwait and Iran. It would like to set up joint committees with its neighbors on how to share the oil. In April 2009, Iraq started work on the Safwan field with Kuwait.

Kurdistan Regional Government Issues
The Kurdistan Regional Government (KRG), the official ruling body of a federated region in northern Iraq that is predominantly Kurdish, passed its own hydrocarbons law in 2007. Despite the lack of a national Iraqi law governing investment in hydrocarbons, KRG has signed oil production sharing, development and exploration contracts with several foreign firms. In addition, more than a dozen contracts signed by the central government with international companies during Saddam Hussein’s regime are being renegotiated or may come under review when Iraq’s oil law and investment framework is in place. In the interim, the Iraqi Ministry of Oil has approved a request from the KRG to send 60,000 barrels per day of crude oil from the Tawke and Taq fields in the Kurdish region to the northern Iraq export pipeline, effective June 2009. KRG Natural Resources Minister Ashti Hawrami expects Kurdish production to reach 250,000 barrels per day by early 2010.

Iraqi refineries, with a total capacity of almost 600,000 barrels per day, have antiquated infrastructure, and their output does not reflect the current demand mix. Despite improvements in recent years, the sector has not been able to meet domestic demand for most refined products, and the refineries produce too much heavy fuel oil. As a result, Iraq relies on imports for about one fourth of the petroleum products it uses, with total petroleum product consumption averaging about 600,000 barrels per day in 2008. To alleviate product shortages, Iraq’s 10-year strategic plan for 2008-2017 set a goal of increasing refining capacity from 600,000 barrels per day to 1.5 million barrels per day. Iraq has plans for 5 new refineries, as well as plans for expanding the existing Daura and Basrah refineries.

Natural Gas


According to the Oil and Gas Journal,Iraq’s proven natural gas reserves are 112 trillion cubic feet (Tcf). An estimated 70 percent of these lie in Basra governorate in the south of Iraq. Probable Iraqi reserves have been estimated at 275-300 Tcf, and work is currently underway by several IOCs and independents to accurately update hydrocarbon reserve numbers. Iraq’s proven gas reserves are the tenth largest in the world, and two-thirds of resources are associated with oil fields including, Kirkuk, as well as the southern Nahr (Bin) Umar, Majnoon, Halfaya, Nassiriya, the Rumaila fields, West Qurna, and Zubair. Just under 20 percent of known gas reserves are non-associated; around 10 percent is salt “dome” gas. The majority of non-associated reserves are concentrated in several fields in the North including: Ajil, Bai Hassan, Jambur, Chemchemal, Kor Mor, Khashem al-Ahmar, and al-Mansuriyah.


Iraqi natural gas production has risen since 2003, and has returned to levels reached during the mid-1990’s. However, its 2006 dry natural gas production of approximately 104 billion cubic feet (Bcf) per year is still far below its peak level of 215 Bcf reached in 1989. The Ministry of Oil reported that approximately 60 percent of associated natural gas production is flared due to a lack of sufficient infrastructure to utilize it for consumption and export. Significant volumes of gas are also re-injectedto enhance oil recovery efforts. In addition, the flaring of the natural gas has meant lost Liquefied Petroleum Gas (LPG) output of an estimated 4,000 tons per day, while at the same time there are LPG shortages requiring imports of 1,200 tons per day. To reduce flaring, the state-owned South Gas Company signed an agreement with Shell in September 2008to implement a 25-year project to capture flared gas and provide it for domestic use, with any surplus sent to an LNG project for export.

Upstream Development

The non-associated gas fields reportedly slated for priority development are mostly in the northern governorates near Kirkuk, including: al-Mansuriyah and the nearby Khashem al-Ahmar and Jaria Pika, Kor Mor, Akkas, Chemchemal and Siba. It is also been reported that the government of Iraq plans to capture more associated gas at Rumaila and Az-Zubair within five to ten years.
Iraq’s 10-year strategic plan for 2008-2017 set a goal of increasing natural gas production to 2.5 trillion cubic feet per year, and to end the flaring of natural gas. As part of this plan, Iraq planned three licensing rounds. The first was announced June 30, 2008, and included an expected $5 billion investment for natural gas fields with 22 Tcf of reserves, including Akkas in the western desert and al-Mansuriyah in the east. The contracts to develop these fields are planned for mid-2009. The second bidding round with 26 Tcf of reserves was planned for 2009, and includes the Siba field in the Basra area.

Iraq signed an agreement on producing oil in Bedra Region with a consortium which is a partnership of Russian Gasprom Neft Turkish TPAO, South Korean Kogas and Malaysian Petronas. Iraqi State owned oil companies have a share of %25 in this consortium. This consortium won a bid which was held in December 2009. This agreement will last for 20 years of time which is made for oil production of oil. Production is 170.000 barrels per day in Bedra region. Iraq government made agreements with 45 companies from 23 countries in December 2009 which is on oil reserves worth $ 41.2 billion. Russian giant oil production company LUKoil which was withdrawn from Iraq after the Iraq War in 2002, has been returned to west Kurna-2 region with the cooperation of Norwegian Statoil (ASA) Company. Russia had cancelled the payment of Iraq’s dept of $ 10 billion.

It is clear that Iraq is getting more and more privatized on producing and selling energy. International status and US effect on energy obliges Iraq to that kind of a policy. Iraq’s energy policy cannot be designed by Iraq’s own. Not only international pressure but home affairs of Iraq are so much complicated. Election cannot solve those internal problems in a short – time period. Energy games on Iraq will expected to continue after the election but actors and roles are a bit changing.

Iran was the most benefited country from the US invasion of Iraq in 2002. Actually, Iran got stronger and stronger after the invasion. Iran started the uranium enrichment program which seen as a possible threat especially by US. Iraq is so much problematic because of the conflicts and stability problem in its territory. So Iraq becomes more vulnerable to outside pressures. Iraq does not have the enough power to solve its problems by its own. Iraq needs to arrange new laws for preventing conflicts and to construct a political stability. Iran’s pressure on Iraq is based on forming a Anti-American government in Iraq. Iran is investing on Iraq’s energy sources and making donations to religious associations to increase their effect on Iraq.

US is planning to withdraw from Iraq until 2011, after US withdrawn, Iraq is expected have more problems about internal security. So Iraq will expect aid from its neighbors, Iran is preparing for this kind of an invitation and Iran would definitely use Iraq’s unstable situation to use Iraq’s energy resources and Iran would intervene Iraq policies. Russia is an another matter of fact on energy in the region. Russia will try to dominate natural gas production and exportation with using the advantage of its stability.

Iraq should find a solution to prevent a possible state of conflict solution may include delaying US withdrawn too. Consolidative laws for ethnic and religious groups and powerful support for efficiency of these laws may be effective for assuring stability. If stability cannot be assured energy exploitation over Iraq will become more widespread on oil and natural gas resources. It should be stated that Iraq is privatizing its energy production infrastructure with the agreements which are signed with foreign companies. This is a result of globalized world economy but Iraq’s policy seems to be a result of the conflicts within the region. Iraq cannot administrate its energy resources but privatize them. It seems to be hard to form a new government in Iraq, according to the unofficial results al- Iraqqiya coalition which is leaded by former prime minister Iyad Allawi is going ahead with a minor difference, National Iraqi Alliance and State of Law Coalition will be the second and third parties. Election results are hard to be predicted but a coalition government will be inevitable in Iraq. If Iraq cannot form a strong government after the elections then Iraq would lose its sovereignty on its energy resources so Iraq’s sovereignty in its borders will become suspicious.

Nuclear Energy Gift - Prof. Dr. Sümer Şahin

Nuclear energy is the main energy source of universe because all stars including sun produce their energy from fusion nuclear reactions. Fusion is the producing engine of the energy resources. All energy sources are transformation of the energy which is derived from fusion in the sun. World’s energy future will be shaped by nuclear energy for certain because density of nuclear energy is significantly higher than any other energy types. The main cause at heading towards nuclear energy in the 21st century is that nuclear technology is the locomotive engine of developing high level technology and electricity is a by product energy. The ratio between the need of science and technology and the need of technology is equal. If you need high level science and technology, you will need nuclear energy absolutely. Alternative energy sources cannot replace the role of nuclear energy.

Hydraulic energy and wind power have a very low density of energy when they are compared to conventional thermal energy, which is produced by chemical burning (coal, natural gas, oil) and its density is higher than both hydraulic energy and wind power by ~ 10000 times. Thermal energy has been the main energy type used in the 19th and 20th centuries. Density of nuclear energy is 10 million – 100 million times higher than conventional thermal energy. Chemical energy production per reaction is in the range of few electron volts, but energy production from fission per reaction is 200 million electron volts and energy production from fusion is 17 million electron volts. 1/5000 of natural waters are heavy water. If extract deuterium from 1 lt of natural water and burn it in fusion reactor, produced energy will be equivalent to the energy which will be produced from burning of 300 lt of benzine.

Load factor of nuclear energy is also another important issue which shows the superiority of nuclear energy. Load factor of nuclear reactors is around 90 % - 98 %.

Developed countries use nuclear energy widespread but underdeveloped countries still producing energy from chemical thermal energy or hydro power. The block which has most widespread use of nuclear energy is EU. Among the countries US is the leading country in nuclear energy use. EU and US are giving a high level of importance to nuclear energy. For instance, Belgium which can be counted as a small country by its territory size has 7 nuclear centrals. Europe does not have the raw material resources needed for producing nuclear energy; Europe takes needed raw material from Africa. The raw nuclear material is mainly uranium. In spite of its resources Africa does not have any nuclear power plants except two nuclear Load factor in South Africa.

There are great discrepencies in distribution of energy worldwide. There are 1.5 billion people who have not interacted with electrical energy and there are 750 million people who have not even seen the electrical light. This is a big inequality on sharing the energy among humanity.

Nuclear energy production does not have that much danger which environmental associations mentioned. Nuclear power plants are constructions of high level technology and there are no safety problems about any issue. Arguments which defend that nuclear power plants are deadly dangerous are a piece of slanders. The worst disaster caused by nuclear energy was the Chernobyl Disaster which was happened in 1986. Nearly 30-40 people died by immediate effects, and some more thereafter. This death count is very near to a dead count which will be caused from a plane crush. Radioactive nuclear waste material produced by world’s nuclear reactors is 500 cubic meters/year; amount of industrial hazardous materials which consist of extremely highly toxic, carcinogenic materials are 10 million cubic meters measured in a year. Other industrial waste is measured as 1 billion cubic meter per year. Danger caused by highly toxic industrial waste is not less than the danger may be caused from radioactive nuclear waste. Nuclear radiation exists since the universe’s existence; it comes from sun, space, human, from stones, etc. There are radioactive materials everywhere so everybody is exposed to radiation at any place or situation. Intensity of radiation is the determining factor for the danger rate of nuclear energy.

Discussions on the danger of nuclear energy production are not scientific based discussions. Ideological aspects are coming forward while discussing this issue. There is a tendency towards anti-nuclear idea within some marginal groups in Turkey. These people, who are against nuclear energy, have not much information on nuclear energy so they can be called as half enlightened people. Anti-nuclear movements have no rational base actually. Even Patrick Moore (http://www.greenspirit.com/index.cfm) who is the founder of “Greenpeace” (an environmentalist association), admitted that nuclear energy is a need for future demand in his article published in The Washington Post in 2006. Moore also adds that environmentalist movements are opposing to all high technology and heavy machines and this leads world to a blind alley. In his Nuclear Statement to the US Congressional Committee http://www.greenspirit.com/logbook.cfm?msid=70, he states wordly “I want to conclude by emphasizing that nuclear energy – combined with the use of other alternative energy sources like wind, geothermal and hydro – remains the only practical, safe and environmentally-friendly means of resolving America’s energy crisis. If America is to meet its ever increasing demands for energy, then the American nuclear industry must be revitalized and allowed to grow. The time for common sense and scientifically-sound leadership on the nuclear energy issue is now.”

The main aim of international treaties which were on nuclear energy is to develop nuclear energy for commercial uses. Treaties were functioned well in 60s and they prevented a potential nuclear weapon production spread over the world. Also they contain articles on helping no-nuclear countries to develop their nuclear energy. But developed countries generally offer alternative energy sources to underdeveloped countries. This behavior is honest. Countries which do not have nuclear energy such Turkey signed the Nuclear Non-Proliferation Treaty (NPT), although Turkey did not need to sign this kind of a treaty because Turkey has no nuclear energy production so it is a mistaken and meaningless policy for Turkey, before the start of the construction of a nuclear reactor. International treaties about nuclear energy are adequate for today but there is a problem in their functioning. Countries which have nuclear weapons have an intention to not signing these treaties such Israel. These treaties are expected to control the Proliferation of nuclear weapons but they are not effective on the countries which have nuclear weapons.

As stated before, most developed countries on producing and using nuclear energy are within the EU. US is the another country which has a high level of nuclear energy technology. Nuclear energy is an important gift given by God to people, every people on the world should benefit from nuclear energy. There are countries which have broken this nuclear energy monopoly. Those countries such as Japan and South Korea achieved their success by applying methodical state policies. The safest and most developed nuclear reactors are designed and constructed by Japan. Canada and South Korea can be counted also as other most successful countries about designing and constructing very safe nuclear reactors.

Turkey has been signing protocols to construct a nuclear power plant for 40 years. The first agreement on constructing a nuclear power plant in Akkuyu - Turkey was signed in 1960s with Sweden. All issues negotiated and finalized between Turkey and Sweden. There was a road problem to Akkuyu that roads were not sufficient to carry heavy loads and Turkey was expected to solve this problem because this issue was not included in the nuclear reactor construction package proposal given by Sweden. Turkey simply did nothing to solve this problem. Agreement between Turkey and Sweden is then cancelled by Sweden. Protocols on construction of nuclear centrals in Turkey were signed with various countries like Canada, France, Germany, US but none of them finalized in the near past. There are no expectations of a nuclear energy development in Middle East until the year 2050. Iran and United Arab Emirates are exceptional. UAE came to an agreement on building a nuclear power plant with South Korea. Iran is studying on nuclear energy by its own. .

Shah Regime was giving a particular importance on nuclear energy production in Iran. Shah regime was overthrown by Khomeini while France – Germany Partnership was constructing two nuclear reactors in Iran. 60% of the construction was finished at the time when Khomeini became the leader of Iran. Khomeini government stopped nuclear power plant construction because of their anti-western ideas. In 90s, Iran signed a treaty with Russia for finishing up the constructions of these reactors. In a speech of Iran Energy Minister which was made in 2009 stated that “Russia did not finish the nuclear centrals for 20 years and Russia is not likely to finish them in the next 200 years.” Iran decided to develop nuclear fuel needs by its own after Russia’s unwillingness to complete the Iranian nuclear reactors. Iran started the uranium enrichment program at last. Iran’s studies on nuclear energy aim at commercial use of nuclear energy, so far. This uranium enrichment only provides the needed fuel for the nuclear reactors which were not finished yet.

There are chances for countries which do not have nuclear energy production yet actually if they choose and come to an agreement with a qualified country or partnership for building nuclear power plants on their territory. Qualifications of the countries which are capable of building nuclear centrals are important at this point. For instance, Russia has an unsuccessful past on building nuclear power plants with the Iran case. Japan Hitachi Company can be called as the most successful company on building nuclear power plants. Hitachi Company is able to finish a nuclear power plant in 39 months if agreement is signed, this speed can be called as a record in nuclear power plant building. Canada finishes building up a nuclear power plant in 60 months, US lost its capability of building nuclear reactors within the last 30 years so US orders nuclear reactor components from South Korea. On the other hand France – Germany partnership builds nuclear power plants in 5 or 6 six years in their own countries but their past about building centrals abroad is unsuccessful. Building of a nuclear power plant to Brazil took 24 years and 6 months for France – Germany Partnership. This partnership has not finished building of another reactor in Finland which was started ~ 15 years ago. If Turkey or countries like Turkey have plans for building nuclear power plants, they have to have correct knowledge about nuclear power plants and they are obliged to design a well-planned program for nuclear energy future. Qualifications of companies and countries should be examined well and decisions should be taken carefully with a stable government policy. A nuclear power plant produces electricity for a century; it is a long term and productive investment.

If Turkey had started a nuclear energy program 40 or 50 years ago, today per capita of Turkey would be around 30000 – 40000 dollars. Also EU would open its gates to Turkey, if Turkey becomes a country which has high level of technology. If Turkey prepares and applies a nuclear energy program efficiently for forthcoming 5 years, Turkey’s membership of the EU will be approved before the year 2015. Nuclear energy usage is a determining factor for a country’s respect in international area. Turkey will not face with problems such as Armenian Genocide arrogations if Turkey focuses on high level technology and succeeds.

Foreign approach on Turkish technology development should be interpreted carefully. Western countries have a subtile tendency to undermine some technological developments because they will benefit from an increased dependency of Turkey. It should not be forgotten that Turkey had stopped developing airplane industry because the US offered airplanes practically free of charge in 50’s.

If a country wants to achieve a high level of technology and development, the one and only guide is science leading to industrial production.

New Energy Bridge: Pakistan - Ali Külebi

2/3 of world population lives in Asia. World’s important natural resources are in this continent and 30% of the world trade is within the Asia as well. Japan is one of the five biggest economies in the world so it is expected that there will be three Asian countries in the five biggest economies of the world in the near future. Asia continent will be a matter of fact on shaping world economy and politics in the future.

There is also an important country in Asia which do not become a giant power but affective on world politics. Regional power Pakistan is a very important country with its high population, its strategic location which connects Central Asia to open seas, Southern and Western Asia. Pakistan which is observer member of Shanghai Cooperation Organization, also connects Shanghai Cooperation Organization’s member countries to Arab Sea so Pakistan cements its strategic location with this condition too. Pakistan is only Muslim nuclear power in the world in respect with its memberships to international organizations and its military power.

Besides all those important issues, Pakistan has a strategically important role for the countries China, Japan and India which are called as Asian Tigers, with its potential place in the energy transportation and supply network of those countries. It would be a appropriate approach to say that India which is in a serious conflict with Pakistan for years, cannot solve its energy problems without having a cooperation with Pakistan.

Its clear that Pakistan has some major problems in contrast with its rising strategic importance on energy transportation routes and transportation of fossil fuels to Arab Sea.

Pakistan’s some major problems are spreading radical religious terror which is spreading inside the country, ethnic terror in Belucistan which has foreign origins, Pakistan had constructed and developed nuclear power as a result of Keşmir problem with India which cannot be solved since 1947. This nuclear power increased the US pressure on Pakistan.

In spite of its nuclear technology and three nuclear power plants, Pakistan will need more energy with it highly increasing population. This friendly country seems to be a energy corridor in the future but Pakistan will have a huge electricity need in the future.

Having nuclear technology gives the advantage of producing its own need for Pakistan, if only Pakistan makes the appropriate investments and developments. For having this advantage Pakistan needs to build nuclear power plants which have higher capacity. Nuclear power plants of today usually have a capacity of 1200 Megawatts, each nuclear power plant unit of Pakistan has a capacity of 300 megawatts. This capacity seems to be enough for today’s Pakistan but Pakistan will need more energy in the near future. Thus Pakistan is planning to have nuclear power plants which have 1000 Megawatts capacity. As a result of those studies, Pakistan’s electricity production from nuclear power plants will increase from 500 megawatts to 8000 megawatts in 2020s. Briefly, Pakistan will produce 16 times more electricity by nuclear power plants ten years later. This precisely means an important production and having liberation against foreign dependence for an undeveloped country like Pakistan which has not fossil fuel resources.

Pakistan which can deal with its energy hunger with the nuclear energy production, has also so much advantages deriving from its important geopolitical location on fossil fuels. Pakistan is in the middle of the Central Asian Countries which has rich oil and gas resources. Turkistan countries in Central Asia have oil reserve of 24 billion tons and have natural gas reserve of 3300 billion cubic meters. These Turkistan countries can reach open seas and world markets limitedly, Pakistan is also a path for this countries with Turkey.

On the other hand, not only Central Asia, Middle East which has 58% of the world oil reserves and has 25% of the world natural gas resources, also dependant on Pakistan’s geopolitical location.

As a result, Pakistan can serve for three main energy corridors,

- A north-south oil corridor which will connect Middle East and Central Asia to China.
- A east-west corridor which will connect India to Middle East
- A north south oil and natural gas corridor which will connect India to Turkistan countries is a future plan with building a pipeline link inside Pakistan.

Importance of Fossil Fuels on China – Pakistan Relations

When the issue of connecting Middle East and Central Asia with an oil corridor comes into the account, Gwadar Harbor which is located in southwest of Pakistan, gains importance. This harbor in the west of Karaci and has a distance of 400 km, its distance to Iran Border is 60 km and its distance to Hurmuz Strait is 350 km. Gwadar Harbor has a perfect strategic location for transportation and storage of petroleum. This harbor is also ideal for petroleum transportation between Turkistan countries and China. China contributed the construction of Gwadar Harbor with an aid of $198 million in 2006. Chinese officials also stated that they will contribute to the construction of Gwadar Harbor with serious investments in the future.

China energy demand increased from 8.5 million barrels per day to 9.1 million barrels per day which means an increase of 3.5 % in 2009. China can supply a part of its energy demand through Pakistan and Gwadar.

Gwadar Harbor is also safe for transporting the petroleum which is produced by China in Sudan against the threat of African Pirates.

Efforts of Pakistan for being an Energy Corridor

Pakistan which tries to handle both its own fossil fuel need and Southern and Southeast Asia countries fossil fuel need, was first started working on the Iran-Pakistan-India (IPI) natural gas pipeline with Iran in the beginning of 1990s. Russia Federation supported this project for Iran to sell natural gas to east instead of Europe because of Russia’s desire to establish a natural gas monopoly over Europe. India first leaned towards this pipeline project which was supposed to be an 2.775 km long energy link passing through Karaci and connects Iran’s Pars Region to India. India stated withdrawn signals with using the natural gas prices as an excuse for not to lose nuclear technology opportunity which was offered by US. Pakistan’s strategic ally China has a high energy demand and started working on finding solutions to maintain the project without India.

Another project on energy is which sustains on a less problematic survey than IPI is aiming at carrying Turkmenistan natural gas to Pakistan through Afghanistan since 2002. Because US aims to harm Iran on IPI project but supports Pakistan and India for transportation of Turkmen natural gas. Only problem in the project is the confusion in Afghanistan and lacking transportation security. Afghanistan’s economical benefit from this project named as Turkmenistan-Afghanistan-Pakistan-India pipeline is obvious. Pakistan assigned $10 billion to finish this project which is seriously supported by US and told to be given to a US company for construction. Just like in similar cases, Russia Federation’s detention and sabotaging actions against this project is also recognized.

Another project which can pass through Pakistan is Gulf Countries-South Asia (GUSA) pipeline. This project is in the agenda since the beginning of 1990s. Goal of the project is to carry Qatar natural gas beyond the Gulf, Gwadar Harbor through United Arab Emirates territory and territorial waters. China and India requested to join this project while the process. If this project successes, Pakistan is expected to use 25% of the gas which reached to its territory and sends the rest to Asian countries. This project’s progress is problematic because of finance, lacking of mutual trust and terror threat.

Political Struggles with India delay the Pakistan to become an Energy Corridor

Its clear that Cold War between US and Russia in transformed to a economical survey more than a political survey. Russia Federation which aims to maintain its energy monopoly over Europe, also wants to maintain its transportation country and control monopoly over the fossil fuels of Turkistan countries. Besides Russia’s concern on NABUCCO project, US’s reservations towards Iranian natural gas transportation to Europe and India shows the political dimensions of the game which is played on the energy chess board in Asia Minor.

Pakistan which has kind relations with US just like its neighbors, is taking the cuts derived from these games as much as possible.

Problems about Iran-Pakistan-India(IPI) pipeline project are getting more dimensional because of the political reasons, especially reasons derived from the problem with India caused by Keşmir problem. According to the agreement signed for this project in 1993 between Iran and India, 700 km of the pipeline will pass through Pakistan and will reach India. Project costs $4 billion and it was expected to be so much beneficial for Pakistan. If this project succeeded then Pakistan paid $500 million per year as a transportation payment and also Pakistan will be able to pull an amount of natural gas for itself to diversify its energy provision.

Keşmir problem between these states leading India to withdraw from the project and India is more closer to an idea to construct an undersea pipeline to exclude Pakistan from the issue. In spite of Pakistani guarantee which states pipeline will work in war time, India’s concerns are still important but another important issue is Russia and US support and shackles onto this kind of projects. In this sense, it was stated that Pakistan will get help for having energy from the new dams of the Tajikistan through Wakhan energy corridor, only if US abandons Iran natural. Pakistan’s position is not certain at this point.

While the games on energy proceeds like this, countries which have energy resources or countries which will make use of this energy, harmed from this situation.

Colonial countries’ plans for collapsing and sharing Ottoman Empire are applied upon the countries which have energy resources or countries on energy bridges, in different dimensions.

Liberalization Problems of Turkish Energy Market - Süreyya Yücel Özden

In this century we are living in, it is impossible to understand or interpret any issue or case without the energy perspective. Energy use is actually a life sustaining action. When looking at issues like lightning, education, heating, water, communication, transportation, health and industry every single part of human life bases on energy. Briefly, energy is the basic element of civilization. Until near past, basic elements for life were water, air and earth. It will be appropriate to say that electrical energy should be added to this list. In this sense, without denying the electrical energy developments in Turkey, it should be admitted that there are lots of minor and major problems in Turkey about energy. Two perspectives needed to understand when handling the national and international problems.

A- Internal affairs of Turkey
B- Conditions in Turkey’s International Relations

Internal Affairs of Turkey

1- Turkey is having problems with transforming public energy sector to private energy sector. To regulate energy use, production and transformation, many regulations and laws are enacted. Laws on energy and their dates of release are listed below.
- Law No: 4628, Electricity Market Law, 3 March 2001.
- Law No: 4646, Natural Gas Market Law, 18 April 2001.
- Law No: 5015, Oil Market Law, 20 December 2003.
- Electricity Sector Strategy, 2004,
- Amendment No: 5177 on Law No: 3213 Mining Law, 5 June 2004.
- Law No: 5307 Liquid Petroleum Gas Market Law, 2 March 2005.
- Law No: 5346 Law on use of Renewable Energy Sources to Produce Electrical Energy, 18 May 2005.
- Law No: 5627 Energy Productivity Law, 2 May 2007.
- Law on Geothermal Sources and Natural Mineral Waters, 13 June 2007.
- Law No: 5710 Law on Energy Export, Constructing and Managing Nuclear Power Plants, 21 November 2007.

Sector defined itself in many means and ambiguities overcame mostly. This transformation is important and Turkey has not full liberalized its energy sector yet. There is a lack of communication and cooperation between Ministry of Energy and Natural Sources which is the main responsible in the governmental level and Energy Market Regulatory Authority which is an another regulation body of energy. Communication and cooperation problems also occur in the other bodies related with energy too. Other private associations which are expected to invest on energy, have still many complaints about many issues.

2- Supply Security is an another important problem which still exists in energy sector. There is a 75% foreign dependency for answering the demand on primary energy. For instance there is a 50% dominance of natural gas use at producing electrical energy. Payments which nearly worth $ 50 billion is reported for the energy input of petroleum, LPG and natural gas. These payments are composing the ¼ of the imports and it is an important part of export which worth $132 billion.
Investment Demand

3- Another important problem is the increase of energy demand. If hesitation caused by economic crisis in 2009 does not taken into account, demand increase of primary energy is 5% per year and demand increase of electirical energy is 7% or 8% per year. The issue of answering this demand should be considered. It is predicted that electric consumption of 196 billion Kw/h in 2009 will be increased to 420 billion Kw/h in 2020. According to this prediction the established power of 43000 MW should be upgraded to 96000 MW by a 2 times increase. When all investment demand in energy sector is calculated, $130 billion of financial need is expected in the upcoming 10 years. It is hard the answer the question that How could this financial need problem solved?
4- Another important problem is in the use of energy. Illegal use of electricity, Lose of power while transmitting and distributing electricity and problematic energy structure of the industry causes the extra energy consumption when compared to energy production. In the light of this information expecting a productive use of energy from citizens becomes a senseless expectation.
5- There are other problems apart from building a continuous supply security, demand management, decreasing the foreign dependence, finding appropriate financial support for investments and environmental problems:
- Taxes on fuel consumption.
- In spite of consumers’ cheap energy demand, investors’ high selling price demand.
- Delays or idleness on using local resources for energy production.
- Cancellations of the bids which held for nuclear power plants.
- Lacking construction of natural gas storage facilities.
- Source diversification difficulties.

International Dimensions

Prominent issues in international relations analysis:

- Geopolitical location of Turkey: 70% of the world’s oil and natural gas sources are within the countries around Turkey. In other words Turkey is located between the countries which have hydrocarbon resources and the countries which demand hydrocarbon. Turkey is in the center of Caspian Countries, Middle East Countries and European Countries.
- Countries which have their own energy resources do not hesitate to use the energy card in international relations.
- Internal energy policies would affected from international relations or the world energy politics would have a huge impact on internal energy policies.

Problems and questions about Turkey’s energy policies come forward when the issues are analyzed with the facts listed above. Briefly these problems are:

A) What is the aim of Turkey in respect to its international position? Is Turkey want to become an energy bridge or energy terminal or both? Does Turkey make any preparations according to these aims? How does the future of Ceyhan City planned in respect to field use, transportation, industrial future, residential planning and all other perspectives?
B) What is the current situation at NABUCCO project? Which countries assured to transfer gas to Turkey?
C) How does the capacity increase of the Blue Stream project to 32 bcm affect the projects such as Iraq Natural Gas Pipeline, Egypt – Turkey Natural Gas Pipeline and Qatar Pipeline after the Baku-Tbilisi-Ceyhan Pipeline?
D) How does the issue of providing Turkey’s energy security finalized by agreements with Iran, Iraq, Azerbaijan, Russia, US and EU?
E) What kind of an approach will Turkey have after the KYOTO Protocol? CO2 and greenhouse gas emission is one of the contemporary problems of the world. How does Turkey behave towards this problem?

Each topic above have different dimensions in themselves.

While analyzing energy politics, this result comes forward: energy is the main engine of the economic and social development; energy should be produced in a competitive liberal market with qualified and safe conditions continuously at minimum cost. For solving problems which are explained briefly, Turkey needs to be governed successfully with the national and international consciousness.