TPT January 2009

Turkey: the confluence of trade between Europe and Asia

T urkey’s strategic importance is enhanced by its rich history and land areas in both Europe and Asia. At the doorstep of both North Africa and the Middle East, urkey has historically been perceived and presented as an economic, political, and cultural bridge between East and West. Its geographic boundaries are bordered by no fewer than 10 neighboring countries: Iraq and Syria to the south; Russia, Ukraine, and Romania to the north (via the Black Sea); Iran, Georgia, and Armenia to the east; and Greece and Bulgaria on the west. Turkey’s population of 72.8 million is young and growing. The country is one of the largest in Europe, and its economy is the 16 th largest in the world. The US Department of Commerce (DOC) has identified Turkey as one of the ten most promising emerging economies, and a recent World Bank study also declared Turkey one of the ten countries most likely to enter the top tier of the world economy. Today’s Turkey, modern and open to the world, follows a liberal economic policy in accordance with its political structure. Increased investment in Turkey’s communications, transportation, and energy networks is a high priority so that the country can meet modern global standards. Foreign suppliers have to assume much of the financial and operating risk, but the potential rewards are great. Sectors where multi- national firms have opportunities in Turkey include aircraft, construction, oil, gas and water pipelines, and automotive. Turkey’s strategic location is a huge advantage for foreign companies that are willing to work with their Turkish partners to establish projects and distribute products into larger regional markets and pursue joint venture infrastructure efforts. Yamburg Zapolyarnoye

A large number of Turkish oil and gas pipelines are either underway or currently in the planning stages: Baku-Tbilisi-Ceyhan Pipeline Baku-Tbilisi-Ceyhan (BTC) Pipeline is the first direct pipeline to deliver crude oil from the Caspian Sea to the Mediterranean without crossingRussian soil or passing through the Bosphorus or Turkish Straits. The 1,100-mile pipeline cost nearly $4 billion to build. The line is estimated to have a peak capacity of more than one million bbl/d, and Turkey is expected to earn between $140 and $200 million per year. Kirkuk-Ceyhan Pipeline Turkey’s port of Ceyhan is also the destination for oil exports from northern Iraq in the Kirkuk-Ceyhan oil pipeline. The 600- mile dual pipeline consists of two parallel lines that have a maximum throughput of around 1.6 million mbbl/d. Bosphorus Bypass Options The 17-mile long Bosphorus Straits, only a half mile wide at its narrowest point, is one of the world’s busiest shipping lanes. One project that was expected to increase oil transit through the Bosphorus is the Russian-backed Baku-Novorossiysk Pipeline (Northern Route Export Pipeline), a 990-mile pipeline that transports oil from Kazakhstan’s Caspian Sea area oil deposits to the Russian Black Sea port of Novorossiysk. The pipeline, built by the Caspian Pipeline Consortium (CPC), delivered up to 650,000 bbl/d of oil (based on 2006 figures). Samsun-Ceyhan bypass Another project currently underway is the Samsun-Ceyhan bypass, which will transport oil from Turkey’s Black Sea port of Samsun to Ceyhan on the Mediterranean coast. Once completed, the pipeline is predicted to decrease tanker traffic on the Bosphorus. The 350-mile pipeline is expected to be fully operational by 2010, with expectations of 1 million bbl/d. Source – Energy Information Administration: www.eia.doe.gov/emeu/cabs/Turkey/NaturalGas.html Key Components of Southern Gas Corridor From Caspian Sea to Europe (U) Pipeline . . . . . . . . South Caucasus Pipeline Length . . . . . . . . . 800 km Capacity . . . . . . . . 16-20 billion cubic meters (bcm)/year Cost . . . . . . . . . . . $1 billion Status . . . . . . . . . . Under construction; completion scheduled by yearend. Operations begin upon completion of Turkey’s connecting link from Georgian border to Erzurum, expected by early 2007. Pipeli e . . . . . . . . Turkey-Greece Interconnector Length . . . . . . . . . 280 km Capacity . . . . . . . . 8-12 bcm/year Cost . . . . . . . . . . . $300 million Status . . . . . . . . . . Under construction; completion scheduled for 2006-07. Pipeline . . . . . . . . Greece-Italy Interconnector Length . . . . . . . . . 800 km Capacity . . . . . . . . 8-11 bcm/year Cost . . . . . . . . . . . $1 billion Status . . . . . . . . . . Bilateral governmental agreement signed. Feasibility study completed by Italian firm Edison. Financing not yet completed. Construction could begin by 2008 with pipeline completed by 2009-10. Status of Natural Gas Pipeline Projects in Turkey Project Status Length (miles) Max. Capacity (Bcf/y) energy projects – a key to investment Energy projects – a key to investment

Selected Gasfields and Pipelines Delivering Natural Gas to Europe (U)

Kara Sea

Barents

Urengoy

Novyy Urengoy

Medvezhye

Sea

Norwegian Sea

N O R T H AT L A N T I C O C E A N

Ukhta

Statfjord

R u s s i a

Norway

Troll

North European Gas Pipeline

Primorsk

United Kingdom

North Sea

Volkhov

Yaroslavl’

Bacton

Baltic Sea

London

Moscow

Rus.

Neth.

Zeebrugge

Orenburg

Berlin

Minsk

Bel.

Paris

Ka z a k h sta n

Germany

Belarus

Poland

Karachaganak

Prague

Central Asia-Center

Chazelles

Kiev

Czech Rep.

France

Vienna

Slov.

Aral Sea

Lyon

Austria

Tashkent

Ukraine

Hungary

Milan

Slo.

Uzbekistan

Mol.

Romania

Gazli

Nabucco

Blue Stream

Italy

Tuapse

Caspian Sea

Shurtan

Serbia

Turkmenistan

Black Sea

Tbilisi

Georgia

Bulgaria

Baku

Gasfield Existingpipeline

Ashgabat

Azer.

Komotini

Shatlyk

Otranto

Blue Stream

In operation

750

565 495 700 407

Istanbul

Karadurun

Shah- Deniz

Samsun

Dauletabad

Pipeline . . . . . . . . Nabucco Length . . . . . . . . . 3,400 km Capacity . . . . . . . . 25-30 bcm/year Cost . . . . . . . . . . . $5.5 billion Status . . . . . . . . . . Five transit countries signed agreement with EU in June 2006 to accelerate Iran-Turkey Pipeline In operation 750 South Caucasus Pipeline Under construction 430

Ankara

Erzurum

Pipelineunderconstruction Proposed/plannedpipeline Selectedpipeline

Karacabey

Greece

Afg.

South Caucasus Pipeline

Tu r k e y

Turkey-Greece Interconnector

Greece-Italy Interconnector

Turkey-Greece Interconnector

construction. Final investment decision sought by yearend 2007 with construction to start in 2008. Capacity of 8-13 bcm is targeted for 2011, expanding to 25-30 bcm by 2020. Under construction 186

0

250 500 750Kilometers

M e d i t e r r a n e a n S e a

0

250

500

750Miles

Nabucco

Proposed Proposed

2,050

460-1,100

Boundary representation is not necessarily authoritative.

Persian Gulf

Egypt-Turkey Pipeline

NA

NA

UNCLASSIFIED

775011AI (G00747) 8-06

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J anuary 2009

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