The Turkish Energy Sector. Zurich, 15 th of November 2007 Dr. Arnold Hornfeld. Agenda. Short overview about Turkey’s economical situation Turkish energy sector Development and actual situation of the energy market Projection of electrical energy demand in the future
Zurich, 15th of November 2007
Dr. Arnold Hornfeld
Selected Indicators & Brief Overview
World War II
Post-war experience in economic development:
Average GNP growth at 4.7%
IMF program, continued under a military government:
Massive devaluation of the Turkish Lira, substantial hikes in indirect taxes
Market reforms, breaking the administrative structures of the command economy.
Strong basic infrastructure, esp. in telecommunications and transport.
Liberalization of the capital account:
Populism, 1994 crises, dollarization
Open market economy, persisting macroeconomic instability, 1999 crisis
2001 Economic crises followed by the launch of IMF program.
The European Commision published the 2004 Progress Report and recommended to begin the membership negotiations with Turkey.
Effective beginning of the EU accession process on October 3.
Strong economic expansion with a yearly average 7.5% growth.
Secondary strong growth era.
Full membership to the EU.
January 1, 2014
As of 2006
For the new 10 members of the EU the share of agriculture in GDP is less than 5%, while the industry and services are 30% and 66%, respectively.
GDP by regions (2000)
769,604 sq km
Total Population (2006):
Total GDP (2006):
US$ 403 billions
US$5,600 per capita
State Institute of Statistics (SIS)
Around 2015, Turkey’s population is projected to stabilize at the level of approximately 80 millions.
The size of the adult population is offering the window of demographic opportunities.
The population growth rate is decelerating considerably.
Population of selected age groups (1000 persons)
Population growth rate, %
Source: SIS, TÜSİAD “Turkey’s Window of Opportunity: Demographic Transition Process and its Consequences”,1999
European countries are the biggest export partner of Turkey.
Germany ranks first among the export partners followed by England and Italy.
Main export countries are located in the west.
Exports to Iraq and Russia are higher including the unrecorded trade.
European countries are again the biggest import partners of Turkey.
Share of imports from Asia is constantly increasing.
The reason is obviously China. It became the third biggest import partner of Turkey, as of 2006.
Turkey has suffered from chronic inflation since 1970s.
However, with the launch of the stabilization program following 2001 crisis, the inflation rate declined dramatically.
Despite the deviation from target in 2006, inflation is back at 70s’ levels.
Interest rates have fallen parallel to the amelioration in the macroeconomic fundamentals.
However, the Central Bank has a prudential attitude for a further decrease in interest rates.
Overall industrial production is increasing for the last five years. However, production in labour intensive-sectors such as manufacture of textile products or wearing apperals is decreasing while technology-intensive sectors is increasing.
The increase in production of vehicles, trailers etc. is the main driver of the surge in manufacturing production.
The main driver of the current account deficit has been the rising foreign trade deficit.
The imports of intermediary goods has been increasing since 2001 parallelto robust economic growth.
The imports of consumption goods have also surged with the recovery of demand.
Revenues gained from services sector, excluding tourism, is not enough to offset the foreign trade deficit.
While the deterioration of the trade balance is the primary factor of the current account deficit, the fall in net invisibles’ revenues is making it worse.
The increase in foreign direct investment level has eased the finance of the current account deficit.
Long term borrowing ability of the banks and the private sector in general improved the quality of finance resources.
...The EU accession process lays the ground for the tremendous scope of the reforms...
...alignment of the domestic legislation with the EU acquis provides opportunity to make necessary regulations...
GROSS VALUE ADDED BY SECTORS
Turkey is a strategic actor with regards to the energy security of Europe as;
73% of the crude oil and 72% of the natural gas reserves of the world lie in the Caspian and Middle East regions and Russian Federation, surrounding Turkey.
EU currently imports more than 40% of its natural gas needs and 30% of its oil needs.
The import dependency for natural gas is expected to become 67% by 2020 and to 81% by 2030.
And the import dependency for oil is expected to become 50% by 2020 and to 60% by 2030.
Turkey already plays an important role in the East-West energy corridor with 3368 km’s of crude oil pipelines carrying over 130 million tones of crude oil per annum and around 4000 km’s of natural gas pipelines transferring over XX bcm of natural gas. Current pipelines include;
Baku-Tblisi-Ceyhan (BTC), COP
Blue Stream NGP
Shah-Deniz NGP (Baku-Tblisi-Erzurum)
Iraq – Turkey COP
Pipeline Projects include;
Azerbaijan NGP Project
Egypt-Turkey NGP Project
Iraq- Turkey NGP Project
Jordan-Syria-Turkey NGP Project
South European Gas Ring (Turkey-Greece NGP project with Italy extension)
Nabucco Project (Turkey-Bulgaria-Romania-Hungary-Austria)
Turkmenistan-Iran-Turkey Natural Gas Pipeline Project
NGP: Natural Gas Pipeline, COP: Crude Oil Pipeline, bcm: billion cubic meters, bpd: barrel per day
The EU process requires a 6-7% growth in the next 8 years.
Thus we should:
in design and implementation.
Development Rate %
HYDROELECTRIC POWER PLANT
HatayPOWER DISTRIBUTION COMPANIES
21 Power Distribution Companies
Çanakkale–Ayvacık / 7,5 MW
Aydın-Germencik / 45 MW
Aydın-Sultanhisar / 7,95 MW
Elektrik Üretim A.Ş.
Denizli-Sarayköy / 15 MW
Denizli-Sarayköy / 6,85 MW
In Construction Plants
Hydro & RES
Source : TEIAS (Turkish Electricity Transmission Company)
Source : TEIAS (Turkish Electricity Transmission Company)