High Oil Prices not to Profoundly Affect Turkish Economy

By Economy News Desk, Istanbul
Published: Thursday, January 26, 2006

The increase of oil prices to $70 brought the potential negative impact on the Turkish economy to the agenda. Experts reported precautions are being implemented against the increase, while Turkish Economy Minister and European Union Top Negotiator Ali Babacan claimed the oil price increase will not leave deep impacts on the Turkish economy.

Babacan also said the price increase might slightly influence the current account deficit and inflation; however, "shocking absorbent mechanisms" have been realized in the system, and well established in their efficiency. Despite the increase of oil price from $20 to $70, the targets of the economy were not misguided up to now, and inflation continues to diminish. The rate of five percent determined by inflation targeting is average, even if it encounters "petty deviations".

The minister said the increased oil price in 2005 resulted in a one-point effect for the inflation target, which remained at 7.7 percent although the target was eight percent. Babacan, who traveled to Davos to attend the World Economy Forum meetings, shared his assessments with Turkish news channel NTV, "There is no need for a disaster scenario" because Turkey's shocks "could be absorbed" as the result of implementations.

"The economy's resistance against disaster was tested by the Iraqi crisis and terror activities. We have already considered that oil prices might increase in our estimations," Babacan asked the employment data announced to be evaluated by realizing "seasonality".

Turkey set to complete nuke plants study this week

25 Jan 2006 14:29:51 GMT- Source: Reuters

ANKARA, Jan 25 (Reuters) - Turkey will complete a preliminary study this week on construction of nuclear power stations as part of its strategy to avoid future energy shortfalls, officials said on Wednesday.

Prime Minister Tayyip Erdogan's office will receive the study and is expected to make a decision soon on building between three and five nuclear power plants with a total capacity of 5,000 megawatts, they said.

"Seismic research for the plants and examination of their environmental effects have been made. Our studies covered eight different potential sites," an official told Reuters.

"A number of issues such as seismic faultlines, water, transport, communications and infrastructure are being discussed in a sensitive way in order to choose the best location."

Turkey straddles seismic faultlines and is highly prone to earthquakes.

The Prime Ministry and Energy Ministry will jointly decide the final location of the plants.

Previous efforts to build a nuclear power plant in Turkey stretching back 30 years have failed due to cost and opposition from environmentalists.

Turkey has no nuclear power plants at present. Oil and natural gas imports, along with coal and hydro-electric power, account for most of its current needs.

But a recent spat over natural gas between Russia and Ukraine, Turkey's Black Sea northern neighbours, along with recent falls in Iranian gas exports to Turkey, have highlighted the country's vulnerability to external energy shocks.

Russia stepped in on Tuesday to help Turkey cover a four million cubic metre shortfall in its Iranian gas imports. Russia already supplies 65 percent of Turkey's total gas imports.

Turkey has also suffered from record high oil prices.

Turkish officials have said in the past the nuclear power plants will be funded partly by the public sector but mostly by private financiers.

Turkey aims to put its nuclear power plants into service in 2012 under energy ministry projections.

It has begun talks with leading nuclear power producers such as the United States, Britain, China and Japan on technology transfer and the costs.

Calik Energy received Cankiri Orta coal mine operation

Calik Energy has received the contract with Turkish Coal Board (TKI) to operate Cankiri Orta lignite mine.

Company is to built new Thermal Power plant to generate 100 MWe electricity and pay TKI 25 million YTL mine operation rent for next 25 years.

ENKA wins $1.9bn Oman resort deal

Posted: Sunday, January 08, 2006

Muscat

Omani developers have signed a $1.9 billion construction agreement with a consortium of Turkish and Greek firms for part of the state's biggest tourism project, the developers said.

Private developers Al Sawadi Investment and Tourism signed the pact last week with Enka Insaat, Turkey's biggest construction company, and Aktor Ate, the construction arm of Greek firm Hellenic Technodomiki.

"The Blue City Resort" is one of several giant construction projects planned around the world's biggest energy exporting region, where governments are using record oil revenues to develop tourism, infrastructure and financial services.

The entire project will take 15 years to complete and is estimated to cost $20 billion -- about 80 percent of Oman's gross domestic product in 2004.

Blue City will cover 34 sq kms of coastline near the capital Muscat and will eventually host 2 million tourists a year.

The first phase of the project, to be built by Enka Insaat and Aktor, includes four hotels, two golf courses, and a shopping complex.

Oman is trying to diversify its economy to cushion the shock in the event of a decline in oil prices, which repeatedly surged to new highs last year.

Other Gulf states have similar plans and are handing out multi-billion dollar construction contracts.

Last month Saudi Arabia, the world's biggest oil exporter, announced a $26.7 billion development that includes resorts, a port and a financial services hub.

-Reuters

Turkey: Russia’s best client for gas

Turkey: Russia’s best client for gas

Turkey is going to be going to be paying $260 per 1,000 cubic metres of natural gas imported from Russia this year while European countries pay an average of $135, according to Russian natural gas exporter Gazprom.

Güncelleme: 14:25 TSİ 04 Ocak 2006 Çarşamba

ISTANBUL - Turkey is bound to Russian natural gas for 65 percent of its natural gas requirements.

Belarus pays the lowest rate at $47 per 1,000 cubic metres, Estonia $160, Moldova $160, Armenia and Georgia $110 and the average payment by European Union member states is $240.

In 2003, Turkey negotiated the price for Russian gas down from $148 down to $130 but in the last two years the price has doubled. The bad news is that the increase for 2006 is expected to be 25 percent.

On the other hand, it is said Iranian natural gas imports are ever dearer than the $260 per 1,000 cubic metres paid to Russia. Turkish officials said that due to the structure of the natural gas import deals that price went up by 50 percent in 2005.

Turkey is supplied with Russian natural gas through two pipeline, with 13 billion cubic metres coming through the western pipeline annually and six billion cubic metres via the Blue Stream pipeline laid beneath the Black Sea.

In an interview with television station NTV Wednesday, Fatih Birol, the chief economist for the International Atomic Energy Agency, said that depending on Russia to such a large extend for gas supplies was an significant risk and that Turkey should move towards other alternative energy resources such as nuclear power. Birol said that Turkey should seek other natural gas resources other than those of Russia.

Shortcut to: http://www.ntvmsnbc.com/news/356422.asp

NUCLEAR ENERGY and TURKEY - 2006

During a short presentation and a question and answer session at the Ministry of Energy conference center on Dec 27 (1), the chief economist for the International Energy Agency (IEA) Dr. Fatih Birol, while emphasizing the importance of increased investments in oil and gas production around the world, stated that Turkey had a need for nuclear energy. Dr. Birol, who was in Turkey to publicize the IEA’s annual report on the world’s energy situation 'World Energy Outlook – 2005', said that Turkey must consider nuclear energy seriously without wasting time in order to reduce Turkey’s growing dependence on imports.

Dr. Birol spoke at several other meetings including at an energy seminar organized by the Turkish Association of Petroleum Industrialists (PetDer) in Istanbul, where he emphasized that the nuclear option should be seriouly debated before proceeding to build a nuclear power plant, especially the financing model to be employed, and that the nuclear waste problem should be carefully planned beforehand.

Responding to the reporter’s questions, the Minister of Energy, Dr. Hilmi Guler, recommended Dr.Fatih Birol to focus on energy investment models for developing countries and wondered what sort of a model he would suggest for Turkey. The Minister also said that he should be able to share more information on the tender for the construction of Turkey’s first nuclear power plant, estimated to cost well over $2 billion, to be completed by 2012. Recent news articles have reported that the Prime Minister will announce by end of January 2006 the plans for bulding three to five nuclear power plants with a total capacity of 5,000 MW, with the condition that the electricity distribution companies purchase 7-10 percent of the energy produced by the nuclear power plants. On the financing model, the minister indicated that the Private/Public Participation (PPP) model would be used, emphasizing that the preference would be total private sector participation. Earlier reports have stated that there would be no treasury guarantees which are expected to be provided by the energy sector itself.

The minister also commended Dr. Birol for the many awards that he himself and his organization (IEA, which is an affiliate of the Organization for Economic Cooperation and Development, OECD) had received over the years for the excellent work tthat they have performed over the years. Another organization, The International Atomic Energy Organization (IAEO) and its General Secretary Muhammed El Baradey was the receipient of the 2005 Nobel Peace Prize for promoting peaceful use of atomic energy and limiting its use for military purposes.

The organization responsible for the research, licensing and the regulation of nuclear energy in Turkey, the ‘’Turkish Atomic Energy Institution (TAEK) located in Ankara, has started talks with leading nuclear power plant constructers in the US, England, France, Russia and China. TAEK is expected to be re-structured along two separate lines, one for licensing of nuclear power plants and the other for regulation. Among the sites selected are the Mersin – Akkuyu (where site investigations were started almost 30 years ago), Sinop and areas adjacent to Sakarya river (where the high water demand of the nuclear power plants can be met.) The type of nuclear power plant (boiling water, pressurized water, natural uranium, advanced reactor) has not been selected yet, which is one of the critical issues.

The nuclear energy issue was also covered during the Dec 15/16 panel discussions at the Middle East Technical University (ODTU) in Ankara under the title, 'Is Nuclear Energy the solution?' Another panel discussion took place during the Dec 21 – 23 Fifth Energy Symposium organized by the Association of Electrical Enegineers (EMO) at the National Library in Ankara. The proceedings of the panel, 'Energy Policies and Nuclear Power Plants' has been issued by the EMO of Ankara (2).

As in most countries, there is also a strong opposition to building nuclear power plants in Turkey. A new group formed in Sinop (Nuclear Information Center – NUKBIL) has openly stated that they do not support a nuclear plant near their city which hopes to become a tourist center in the near future. Greenpeace, long active in environmental issues in Turkey also has voiced its oppoistion to building nuclear power plants for a number of reasons. As the Minister of Energy stated during the December 27 meeting, all organizations related to nuclear energy are working together to come up with the best solution since the demand for electricity will keep increasing each year. The Electricity Market Regulatory Authority (EMRA) has estimated that over 5,000MW new capacity will need to be added to the system by 2010.

Notes.
(1) The conference was attended by the representatives of all the instutions and departments under the Ministry of Energy and many organizations, such as Ministry of Foreign Affairs, Ministry of Environment, Ministry of Forestry, Electricity Market Regulatory Authority (EMRA), TUBITAK, The Undersecretariat of Treasury and the State Planning Organization and the press.
(2) Panel on Nuclear Energy, ‘’Enerji Politikalari ve Nukleer Santrallar’’. Panel yoneticisi, Necati Ipek, EMO Ankara Subesi YK Baskani

Recommended publications:

Turkey’s Quest for Peaceful Nuclear Power, by Mustafa Kibaroglu, published in ‘The Nonproliferation Review, Spring-Summer, 1997
Nuclear Power Gains New Power, by Steven Edwards in New York, National Post (sedwards@nationalpost.com).
A new group has been formed to disseminate information on nuclear energy, which is open to anyone interested in this subcet (nuclearturkey@yahoogroups.com)
Turkiye’nin Enerji Sorunu ve Nukleer Enerji, by Necmi Dayday
Nukleer Enerji Dunyada Yeniden Yukselise Gecti – Ilk Santral temeli 2007’de, by Olcay Aydilek, Global Energy magazine, August 2005 (olcaydilek@sabah.com.tr)
Avrupa Birligi’nin Nukleer Enerji ve Guvenlik Politikasi, by Mehmet Durmus, EU Publication

Yuksel Oktay, PE, Civil Engineer,Istanbul