MEDITERRANEAN ENERGY PERSPECTIVES MEP Turkey

1. MEDITERRANEAN ENERGY PERSPECTIVES MEP Turkey TENVA Ankara, 9 September 2014

2. MEP TURKEY • Provides energy supply/demand outlook to 2030 by sector by fuel • Two energy demand scenarios: Conservative Scenario Proactive Scenario • CO2 emissions • Energy import bill • Energy investment requirements

3. THE ENERGY DEMAND SCENARIOS • The Conservative Scenario takes into current policies and ongoing projects, but adopts a cautious approach regarding the implementation of new policy measures and planned projects. • The Proactive Scenario assumes strong efforts to diversify the energy supply mix to favor domestic energy resources, clean energy technologies and prompt implementation of energy demand management programs.

4. Setting main model assumptions Population • 2013-2023: 0.9%2023-2030: 0.8% GDP • 2013-2018: IMF WEO2018-2030: 4.1% Energy prices • International • Domestic

5. AN OVERVIEW OFOVERALL RESULTS

6. ANA BAŞLIKLAR • SEKTÖREL ENERJİ TÜKETİMİ, EKONOMİNİN YAPISINI YANSITMAYA DEVAM EDECEK • KÖMÜRÜN STRATEJİK SEÇİMİ • PETROLE BAĞIMLILIK DEVAM EDECEK • DOĞAL GAZIN GELECEĞİ BİR YOL AYRIMINDA • ELEKTRİK TALEBİ KONTROL ALTINA ALINABILIR • YENİLENEBİLİR ENERJİ POTANSİYELİ BÜYÜK KAZANIMLAR VADEDİYOR • FOSİL YAKIT KAYNAKLI KİRLİLİK BÜYÜYEN BİR SORUN OLMAYA DEVAM EDECEK • İTHALATA BAĞIMLILIK ENERJİ FATURASINI YÜKSELTECEK • ENERJİ SEKTÖRÜ BÜYÜK YATIRIMLAR GEREKTİRECEK • ULUSLARARASI ENERJİ MERKEZİ OLARAK TÜRKİYE

7. ENERGY DEMAND AND GDP Energy demand is set to double in the Conservative Scenario. 20% less energy would be needed in Proactive Scenario.

8. PRIMARY ENERGY DEMAND BY FUEL TYPE Turkey’s energy future will remain fossil fuel based, although the share of RES would increase to 15% in PS.

9. PRIMARY ENERGY DEMAND BY SECTOR • More energy will continue to be consumed to generate electricity than any other sector.

10. PRIMARY ENERGY PRODUCTION • Will not increase as fast as demand

11. ANNUAL NET ENERGY IMPORT BILL Mtoe 2012$ bn 180 110 100 160 90 140 80 120 70 100 60 50 80 40 60 30 40 20 20 10 0 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 Will increase from $55 bn in 2012 to $104 bn in 2030

12. NET ENERGY IMPORT BILL Cumulative net energy import bill over 2013-2030 will be more than double that of 1970-2012.

13. NEED FOR SUBSTANTIAL INVESTMENTS Total investment need between 2013 and 2030 = $260 bn (in 2012 dollars) (Of this, $173 bn between 2013-2023) Electricity sector will account for > 65% of this total, It will be followed by oil (~ 25%)

14. ENERGY INTENSITY 1990-2030 • Set to decrease in both Scenarios. • -5% reduction by 2030 in CS • -23% reduction in PS.

15. CO2 EMISSIONS 1990-2030 CO2 emissions to double by 2030 in CS . 36% lower in the PS.

16. INSTALLED POWER GENERATION CAPACITY: Government Targets vs OME Scenarios GW Wind Geothermal Nuclear Hydro Solar 40 35 30 25 20 15 10 5 0 Government targets for non-Hydro RES could be exceed in PS

17. Fuel Shares in power generation: Government Targets and OME Scenarios 50% Government Target 40% Conservative Scenario Proactive Scenario 30% 20% 10% 0% Renewables Coal Gas Nuclear Future role of natural gas is the key

18. SUPPLY-DEMAND ANALYSIS BY FUELCOAL

19. COAL PRODUCTION • Most of Turkey’s coal reserves are lignite. • Coal production to more than double between 2012 and 2030.

20. COAL DEMAND BY SECTOR • By 2030, coal demand will grow ~70% in CS and 23% in PS. • Power generation will account for half of coal demand.

21. COAL IMPORTS • Majority of the coal demand will continue to be met by imports. • Net coal imports (mostly hard coal)may increase to >40 Mt (CS) or decrease to 18Mt (PS) in 2030.

22. SUPPLY-DEMAND ANALYSIS BY FUELOIL

23. OIL & GAS EXPLORATION • still largely under/un-explored….. • Less than 4300 wells drilled

24. CRUDE OIL PRODUCTION • Will continue to decline, by almost 30% between 2012 and 2030, assuming no major discovery

25. Oil consumption by end-use sectors • will more than double (CS) or nearly double (PS)

26. OIL PRODUCTS CONSUMPTION • By 2030, oil demand is expected to nearly double in the PS, and more than double in the CS. • (Road) Transport will remain the largest oil consuming sector • …despite that pump prices of gasoline and diesel in Turkey are amongst the highest in the world.

27. NET OIL IMPORTS • More than 90% of Turkey’s oil demand is met by imports. • Net total oil imports will continue to increase, • from over 30 Mt to ~ 70 Mt (CS) or ~60 Mt (PS) by 2030. • The share of crude in oil imports will be higher than today.

28. SUPPLY-DEMAND ANALYSIS BY FUELNATURAL GAS

29. NATURAL GAS PRODUCTION • May increase next decade thanks to tight oil and shale gas, but assuming no major discovery in the Med

30. GAS DEMAND BY SECTOR • Will continue to increase in CS but slightly higher than its 2012 level in PS, due mainly to power generation

31. TURKEY NET GAS IMPORTS • …expected to increase by ~70% between 2012 and 2030 (CS), … approximately the same level (a few bcm higher) in the PS

32. SUPPLY CONTRACTS vs GAS IMPORT NEED • After 2022, supply may not cover the expected demand in CS .

33. GAS IMPORT NEEDS vs INFRASTRUCTURE • Sufficient import capacity, but there is room for Iraqi and East Med gas

34. SUPPLY-DEMAND ANALYSIS BY FUELELECTRICITY AND RENEWABLES

35. ELECTRICITY DEMAND by sector • Demand for electricity will more than double (CS) or increase 60% (PS) between 2012 and 2030. • Industry will remain as the largest electricity consuming sector.

36. ELECTRICITY GENERATION by fuel 30% Electricity generation to increase by ~130% to 2030 in CS. Would be 30% less in the PS.

37. INSTALLED ELECTRICITY GENERATION CAPACITY To increase to 125 GW (CS) or 110 GW (PS) • The share of fossil fuel fired plants will decrease to 52% in 2030 (CS), while this decrease will be more pronounced (35%) in PS.

38. INSTALLED non-hydro RES based POWER GEN CAPACItY All non-hydro RES to increase in both scenarios. • Wind remains dominant in absolute values. Solar PV has the fastest growth rates. Wind: 2.3 GW  12 GW (CS), 20 GW (PS) Solar : 0  1.3 GW (CS), 4.2 GW (PS)

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