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Turkey  

Last Updated: April 17, 2014  (Notes)

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Overview

Turkey's importance in world energy markets is growing, both as a regional energy transit hub and as a growing consumer. Turkey's energy demand has increased rapidly over the past few years and likely will continue to grow in the future.

Over the past three years, Turkey has experienced some of the fastest growth in energy demand of countries in the Organization for Economic Cooperation and Development (OECD). Unlike a number of other OECD countries in Europe, Turkey's economy has avoided the prolonged stagnation that has characterized much of the continent for the past few years. The country's energy use is still relatively low, although it is increasing at a fast pace. According to the International Energy Agency (IEA), energy use will continue to grow at an annual growth rate of around 4.5% from 2015 to 2030, approximately doubling over the next decade. The IEA expects electricity demand growth to increase at an even faster pace.

Meeting this level of growth will require significant investment in the energy sector, much of which will come from the private sector. Although Turkey is planning large investments in natural gas and electricity infrastructure, the government seeks to reduce the country's dependence on imported natural gas by diversifying its energy mix.

In addition to being a major market for energy supplies, Turkey's role as an energy transit hub is increasingly important. Turkey is a key part of oil and natural gas supplies movement from Russia, the Caspian region, and the Middle East to Europe. The country has been a major transit point for seaborne-traded oil and is becoming more important for pipeline-traded oil and natural gas. Growing volumes of Russian and Caspian oil are being sent by tanker via the Turkish Straits to Western markets, while a terminal on Turkey's Mediterranean coast at Ceyhan serves as an outlet for oil exports from northern Iraq and for both oil and natural gas exports from Azerbaijan.

Map of Turkey

Source: Central Intelligence Agency, The World Factbook

Petroleum & other liquids

Over the past decade, Turkey's economy expanded, and its petroleum and other liquids consumption has increased. With limited domestic reserves, Turkey imports nearly all of its oil supplies.

As of January 1, 2014, the Oil & Gas Journal (OGJ) estimated Turkey's proved oil reserves at 295 million barrels, located mostly in the southeast region. Turkey's oil production peaked in 1991 at 85,000 barrels per day (bbl/d), but then it declined each year and bottomed out in 2004 at 43,000 bbl/d. Although Turkey's production of liquid fuels has increased slightly since 2004, it is far short of what the country consumes each year.

In 2010 and 2011, Turkey's economy was one of the fastest growing economies in the world at more than 8% per year, and Turkey's oil consumption grew with this economic expansion. While economic growth slowed in 2012 and Turkey's economy only grew at just over 2% from the previous year, total consumption of liquid fuels in Turkey increased by 6% in 2012. Turkey's economy grew by 4% over 2013, and total consumption of liquid fuels in Turkey increased by another 6% in that year. Its domestic production, however, shows no signs of any significant growth in the short term.

Graph showing Turkey's petroleum and other liquids and production, 2001-13

Sector organization

Although there are a number of international firms operating in Turkey, the state-owned firm TPAO has preferential rights in petroleum exploration and production.

Türkiye Petrolleri Anonim Ortaklığı (TPAO) is the main exploration and production entity in Turkey. As a state-owned firm, TPAO has preferential rights, and any foreign involvement in upstream activities is limited to joint ventures with TPAO. Overall, TPAO produced about 75% of the total oil output in Turkey in 2011, according to the IEA.

The government offers several types of tax breaks to encourage exploration and production, including lower corporate tax rates, exemptions from import duties for material and equipment, and exemptions from value-added tax for exploration activities.

A number of entities are involved in the oil sector, including the Ministry of Energy and Natural Resources (MENR) and the General Directorate of Petroleum Affairs. MENR is responsible for the formulation and implementation of energy policies in coordination with public and private entities. The General Directorate of Energy Affairs is the main policy-making body within MENR, and it is tasked with executing energy policy. In addition, it conducts studies on energy policy, energy markets, efficiency, and environment. Other regulatory bodies include the General Directorate of Petroleum Affairs (regulates exploration and production activities in the oil and gas sector), Energy Markets Regulatory Authority (independent regulatory authority for the oil and gas market), Competition Authority (regulates mergers and acquisitions in the market), and the State Planning Organization (assists in preparation of national development plans, evaluates public investment projects, allocates funds, and monitors implementation).

Exploration and production

Most of Turkey's 295 million barrels of proven oil reserves are located in the Batman and Adiyaman Provinces in the southeast (which is also where most of Turkey's oil production occurs), with additional deposits found in Thrace in the northwest. The U.S. Geological Survey estimated about 438 million barrels of oil in as yet undiscovered resources in the southern onshore part of the country. While technically recoverable, it is unclear whether these resources will be economically viable to develop.

Offshore reserves may become a future source of Turkey's oil supply. There may be significant reserves under the Aegean Sea, although this has not been confirmed because of ongoing territorial disputes with Greece. The Black Sea may also hold significant oil production potential for Turkey. The Turkish national oil company, TPAO, has increased its exploration activities in the Turkish portion of the Black Sea, which could hold between 7 and 10 billion barrels of oil. The offshore area is being explored by TPAO, which has formed joint ventures with ExxonMobil and Petrobras. TPAO's short-term goal is to develop the resources situated in the Black Sea. Turkey's Ministry of Energy and Natural Resources plans to begin commercial production in the Black Sea by 2016.

In addition to the Black Sea, TPAO plans to develop hydrocarbon resources in the Mediterranean. In November 2011, TPAO signed an agreement with Royal Dutch Shell for hydrocarbon exploration in the Mediterranean and the southeast area of the country. This agreement covered plans for shale gas exploration in the southeast near the city of Diyarbakir. According to Turkey's Ministry of Energy and Natural Resources, Shell began exploration at the Saribugday 1 field in August 2012.

Consumption and imports

In 2013, Turkey's total liquid fuels consumption averaged 734,800 bbl/d. More than 90% of crude oil consumption and significant quantities of petroleum products came from imports. According to the IEA, Turkey's crude oil imports are expected to double over the next decade. In 2012, the majority of Turkey's crude oil imports came from Iran, which supplied 35% of the country's crude oil. Russia, once the largest source country of Turkey's crude oil, has fallen behind Middle East suppliers in terms of volume and is now the fourth-largest supplier of crude oil to Turkey.

In addition to crude oil imports, Turkey is a net importer of oil products. According to the IEA, Turkey's domestic refinery production was insufficient for meeting domestic demand, covering only 52% of domestic distillate fuel use and only 21% of domestic liquefied petroleum gas (LPG) and ethane use in 2012. Imports covered the remaining share, although domestic refinery outputs of these products have been increasing over time.

Pie chart showing Turkey's crude oil supply mix, 2012

Transit and infrastructure

Turkey plays an increasingly important role in the transit of oil. It is strategically located at the crossroads between oil-rich Former Soviet Union and Middle East countries, and the European demand centers. In addition, it is home to one of the world's busiest chokepoints, the Turkish Straits, through which 3.0 million barrels per day flowed in 2013.

Turkey has two domestic crude oil pipelines and two major international oil pipelines to meet demand in Turkey and to transport exports. Turkey is also home to one of the world's busiest chokepoints, the Turkish Straits, and has been seeking bypass alternatives to ease the congestions in the area.

Domestic pipelines

The domestic pipelines are both owned and operated by BOTAŞ. The Ceyhan-Kirikkale Pipeline is a 278-mile pipeline that delivers crude oil from Ceyhan to the Kirikkale refinery near Ankara and can transport approximately 100,000 bbl/d of crude oil. The Batman-Dortyol Pipeline runs approximately 320 miles and transports the domestically-produced crude oil in the Batman area to the terminal in Dortyol on the Bay of Iskenderun near Ceyhan.

International oil transit

Turkey is playing an increasingly important role in the transit of oil supplies from Russia, the Caspian region, and the Middle East to Europe, with the Turkish government deriving significant revenues from the transit fees. Significant volumes of Russian and Caspian oil move by tanker via the Turkish Straits to Western markets. Approximately 3.0 million bbl/d flowed through the Bosporus and the Dardanelles in 2013 (approximately 2.5 million bbl/d of crude oil and 0.5 million bbl/d of petroleum products).

Oil shipments through the Turkish Straits decreased from over 3.4 million bbl/d at their peak in 2004 to 2.6 million bbl/d in 2006 as Russia shifted crude oil exports toward the Baltic ports. Traffic through the Straits increased again as crude production and exports from Azerbaijan and Kazakhstan rose in recent years.

A terminal on Turkey's Mediterranean coast at Ceyhan facilitates oil exports from northern Iraq via a pipeline from Kirkuk and from Azerbaijan via the Baku-Tbilisi-Ceyhan pipeline. The Kirkuk-Ceyhan pipeline is Turkey's largest oil pipeline (by capacity) and serves as a transport pipeline of Iraqi oil. It is approximately 600 miles long and consists of two lines with a capacity of 1.65 million bbl/d. However, only one of the twin pipelines is operational, with a maximum operational capacity of 400,000 bbl/d, according to the Office of the Special Inspector General for Iraq Reconstruction (SIGIR). In late 2012, Iraq and Turkey agreed to continue crude oil imports through this pipeline for another 15 years, although frequent attacks on the pipeline regularly result in operation disruptions. Actual flows averaged just over 300,000 bbl/d in 2012.

The Baku-Tbilisi-Ceyhan Pipeline (BTC) is Turkey's longest pipeline (approximately 1,100 miles). Its original capacity was 1 million bbl/d, which was increased to 1.2 million bbl/d in 2009 with the use of drag-reducing agents. The pipeline transports Azeri light crude (mainly from the Azeri-Chirag-Guneshli field) via Georgia to Turkey's Mediterranean port of Ceyhan for further export. Since 2008, Kazakh crude oil has also been shipped via the BTC. The crude is then shipped via tankers to European markets. The pipeline initially came into service in June 2006.

Bypass routes

To ease increasing oil traffic through the Turkish Straits and in an effort to anticipate needed increases in pipeline capacity for increasing volumes of Caspian oil, a number of Bosporus bypass options are under consideration in Bulgaria, Romania, Ukraine, and Turkey itself. The BTC Pipeline, which bypasses the Turkish Straits chokepoint, is the first of many planned or proposed bypass pipelines to be constructed.

Bosporus bypass options outside of Turkey include the Odessa-Brody pipeline in Ukraine, which currently transports crude oil into Odessa (reverse mode). Others have not yet been constructed, but proposals include the Pan-European Oil Pipeline, the Bourgas, Bulgaria to Vlore, Albania, and the Bourgas to Alexandropoulos, Greece pipeline.

There were a number of bypass options proposed in Turkey over the past decade, including:

  • Samsun-Ceyhan Pipeline would transport oil from Turkey's Black Sea port of Samsun to Ceyhan on the Mediterranean coast. The project includes the construction of a 350-mile oil pipeline, a new terminal for receiving oil at Samsun, a terminal for exporting the oil, and a storage plant at Ceyhan. The oil pipeline would have a maximum initial transportation capacity of 1 million bbl/d, which can eventually be increased to 1.5 million bbl/d.
  • Kiyikoy-Ibrikbaba Pipeline is a 1.2 million bbl/d pipeline that would run between Kiyikoy on the Black Sea and Ibrikbaba on the Aegean Sea near Greece. This pipeline was proposed more than six years ago, but very little progress has occurred.
  • Agva-Izmit Pipeline would connect the Black Sea to the Tupras' (Turkish Petroleum Refineries Company) Izmit refinery.
  • Canal Istanbul is a proposed 30-mile link between the Black Sea and the Sea of Marmara. The waterway would be located on the European side of the Bosporus and completed by 2023. However, given the size of the undertaking and the associated cost, this project is the least desirable and least feasible option, and likely will not be completed.
  • Kurdish Regional Government (KRG) Pipeline would connect oil fields in the northeast, KRG-controlled portion of Iraq to Turkey via an independent pipeline from Taq Taq to Fishkhabur. The KRG has already constructed the pipeline with a capacity of 300,000 bbl/d, but Iraq's government has threatened litigation against Turkey for buying KRG oil without official approval.
Ports

The port of Ceyhan has become an important outlet for both Caspian oil exports as well as Iraqi oil shipments from Kirkuk. Turkey is seeking to build up Ceyhan as a regional energy hub, with private investors receiving approval to build several refineries at the oil terminal, adding revenue beyond transit fees.

The Ceyhan oil terminal has four crude oil loading berths. Two outer berths can accommodate tankers up to 300,000 deadweight tons, while the two inner berths can accommodate ships up to 150,000 deadweight tons. In 2012, Ceyhan handled more than 600,000 bbl/d of Azeri exports and about 300,000 bbl/d of Iraqi crude oil exports to Europe and the United States.

In addition to crude oil, Iraqi condensate exports have also started to load in Ceyhan. In September 2012, the Kurdish Regional Government trucked the first cargo of condensate from Iraq to Ceyhan, which was loaded onto a vessel on October 4. The size of the cargo was about 105,000 barrels, with additional cargoes already planned to be shipped via the same route.

The Kurdish Regional Government also stated in early 2014 that it would work with the Turkish government to open several new border crossings, increasing the potential volume of exports by truck.

Refinery sector

As of January 1, 2014, Turkey had six refineries with a combined processing capacity of 714,275 bbl/d, according to Oil & Gas Journal. TÜPRAŞ is Turkey's dominant refining firm and operates more than 85% of the total refining capacity. TÜPRAŞ also owns about 59% of the total petroleum products storage capacity in Turkey.

Starting in 1990, Turkey's government began to sell shares of state-owned refineries to the private sector. In 2005, the government auctioned off 51% of the shares of the formerly state-owned TÜPRAŞ to the Koc-Shell Joint Venture (JV) Group. The Koc-Shell JV includes Koc Holding, Aygaz, OPET, Shell Overseas Investment, and Shell Company of Turkey. The remaining 49% of shares are publicly traded.

Natural gas

Turkey holds a strategic role in natural gas transit through its position between the world's second-largest natural gas market, continental Europe, and the substantial natural gas reserves of the Caspian Basin and the Middle East.

As of January 1, 2014, the Oil & Gas Journal estimates Turkish natural gas reserves at 241 billion cubic feet (Bcf). Turkey produced 22 Bcf of natural gas in 2012, relying almost exclusively on imports to meet domestic demand. Turkey's energy demand growth has been among the fastest in the world in 2010 and 2011, although slower economic growth in 2012 has dampened the natural gas consumption increase to some extent.

Natural gas accounts for an increasing share of the energy mix in Turkey, and it has overtaken oil to become the most important fuel in terms of volume consumed. Although the Turkish government supports developing the country as a natural gas export hub, Turkey is extremely vulnerable to supply disruptions and may have insufficient pipeline capacity to keep up with both greater exports and increasing domestic demand.

Graph showing natural gas consumption and production in Turkey, 2001-2013

Sector organization

The state-owned Petroleum Pipeline Corporation (BOTAŞ) is the most significant company in the natural gas sector, although the majority of the market is open to competition. BOTAŞ also builds and operates gas pipelines in Turkey, accounts for most of the wholesale market, and accounts for most exports of natural gas.

BOTAŞ is also been the biggest part of Turkey's natural gas distribution market, and the company continues to exercise the Turkish state's mandate for developing the country's pipeline networks and for procuring sufficient natural gas supplies. In addition to ensuring adequate supply for the domestic market, a key part of this mandate has been participation in international pipeline projects that can take advantage of Turkey's location as a key corridor between Europe and the Middle East and Central Asia to play an active role in trans-regional energy supply.

A number of government entities are involved in the natural gas sector, including the Ministry of Energy and Natural Resources (MENR) and the Energy Markets Regulatory Authority (EMRA). MENR is responsible for the formulation and implementation of energy policies in coordination with public and private entities. Other regulatory bodies include the General Directorate of Petroleum Affairs, the Competition Authority, and the State Planning Organization.

In September 2012, MENR proposed a new gas sector liberalization bill. The new version of the bill calls for BOTAŞ to be unbundled into three distinct entities: an LNG trading group, a gas transmission system operator, and a storage facility operator. Gas import and export rights would be transferred to private companies under this new bill. The Prime Minister will need to approve the bill and introduce it to Turkish Council of Ministers before it becomes law.

Exploration and production

Turkey produces a very small amount of natural gas, with the total production amounting to 22 Bcf in 2012. Turkiye Petrolery A.O. (TPAO), BP, and Shell account for most of the country's natural gas production. A number of natural gas fields have been brought on line in the Black Sea, including the Akcakoca, East Ayazli, Akkaya, and Ayazli fields.

Consumption and imports

Turkey is increasingly dependent on natural gas imports as its domestic consumption rises each year. Natural gas is used domestically mainly in the electric power sector.

Natural gas consumption has increased rapidly over the past decade. Despite the temporary declines recorded in 2009, natural gas consumption reached a peak of more than 1.6 trillion cubic feet (Tcf) in 2012. Natural gas is mainly used in power generation and space heating, although significant amounts of natural gas also go to the industrial sector. Consumption growth is expected to remain strong as rising electricity consumption and new power plants continue to spur demand.

The importance of natural gas for Turkey's economy has significantly increased since the early 2000s. In 2000, the power sector consumed approximately 795 million cubic feet (MMcf) per day, and this volume more than doubled to 1.9 Bcf per day in 2009, according to PFC Energy data. Similarly, consumption of natural gas increased from 289 MMcf to 516 MMcf in the residential sector and from 45 MMcf to 243 MMcf in the commercial sector between 2000 and 2009. Industrial consumption nearly tripled over the same time period.

In 2011, Turkey's electric power sector accounted for just under half (48%) of the country's natural gas use. The industrial and residential sectors each accounted for approximately 20%. Natural gas demand peaks in the winter months, when natural gas use for power generation and space heating is highest. Demand during winter months can be double the demand during summer months. Given Turkey's low capacity for natural gas storage to meet its seasonal demand swings, the country relies primarily on increased imports to meet the seasonal increases in demand.

In 2012, Turkey imported approximately 1.6 Tcf of natural gas, with 56% of that volume coming from Russia. Another 18% of the total came from Iran, the second-largest source country. Sizeable shares of natural gas imports also originated in Azerbaijan and Algeria. Most of Turkey's natural gas imports are transported via pipelines, including those from Russia, Iran, and Azerbaijan. Turkey also imports liquefied natural gas (LNG), particularly from Algeria and Qatar.

Pie chart showing Turkey's natural gas consumption by sector, 2011
Pie chart showing Turkey's natural supply mix, 2011

Transit and infrastructure

With the launch of the Baku-Tbilisi-Erzurum pipeline in 2007 and the subsequent launch of re-exports of natural gas to Greece, Turkey has begun to stake out its position as an energy bridge for gas supplies from the Caspian to Europe. However, in the long run, Turkey's need to satisfy rapidly growing domestic consumption could affect the country's position as a gas transit state.

Pipeline imports

The majority of Russian gas arrives in Turkey via the Blue Stream pipeline, although sizeable volumes also reach the large population centers in and around Istanbul via the Bulgaria-Turkey pipeline. In total, Turkey imported approximately 0.9 Tcf of natural gas from Russia in 2012, according to Gazprom and Eastern Bloc Research.

Turkey received about 290 Bcf of Iranian natural gas in 2012 via the Tabriz-Dogubayazit pipeline. An additional 118 Bcf arrived from Azerbaijan via the Baku-Tbilisi-Erzurum (BTE) pipeline in 2012. The Turkish central pipeline network distributed almost all of this natural gas to various consumers within the country.

For Turkey to function as a gas transit state, it must be able to import enough gas to satisfy both domestic demand and any re-export commitments as well as provide enough pipeline capacity to transport Caspian natural gas across Turkey to Europe. While Turkey enjoyed considerable excess import capacity a few years ago, this excess pipeline capacity has eroded as Turkey now uses most of its pipeline capacity to meet its domestic demand. Furthermore, possible restrictions on imports of Iranian natural gas because of sanctions would remove Turkey's excess capacity during peak demand months.

Turkey's natural gas demand is highly seasonal, with heating season months (November through February) exhibiting natural gas demand that is significantly higher than in other months. Additionally, the natural gas import infrastructure in Turkey has been a frequent target of terrorists, and Turkey is extremely vulnerable to supply disruptions. The Tabriz-Dogubayazit pipeline has been increasingly targeted by the Kurdish rebel militants. Flows on the Tabriz-Dogubayazit pipeline were disrupted a number of times in 2012. The Baku-Tbilisi-Erzurum pipeline has also been a terrorist target, and flows on this pipeline were halted two times in 2012.

Both the Turkish government and private sector companies have proposed a number of pipeline projects with Turkey playing a vital role in natural gas transit. Although none of these projects have started, many European countries that are net importers of natural gas are particularly interested in realizing at least some of these projects.

The proposed pipelines include:

  • South East European Pipeline (SEEP) was proposed by BP, although details on the proposal are scarce. SEEP would require the construction of only 800 miles of pipeline as it would rely on existing infrastructure and may exceed Nabucco's planned capacity.
  • Trans Anatolian Pipeline (TANAP) project was proposed as an alternative to the unsuccessful Nabucco pipeline project. This project is considering two alternatives, which include the possibility of upgrading the current BOTAŞ pipeline network and/or constructing a new standalone pipeline across Turkey to transport Azerbaijan's natural gas from the Shah Deniz II field. The pipeline's capacity would be 30 billion cubic meters (1060 Bcf) per year. In early 2014, Turkey and Bulgaria agreed to build a new pipeline to connect the two countries' natural gas distribution networks, which would allow additional volumes from Shah Deniz to Europe.
  • Interconnector Turkey-Greece-Italy Pipeline (ITGI) currently operates between Turkey and Greece. An expanded Greece-Italy section would transport about 350 Bcf per day of natural gas.
  • Turkey-Iraq Pipeline would give Turkey access to Iraq's natural gas resources. Although a memorandum of understanding was signed a number of years ago, planning for construction has yet to take place.
  • Extension of the Arab gas pipelineto Turkey would allow delivery from Egypt to Turkey via Jordan and Syria. Given the political instability and unrest that have engulfed the region since 2011, this project effectively has been cancelled.
Liquefied natural gas

Turkey imports LNG from five countries: Algeria, Nigeria, Qatar, Egypt, and Norway, according to PFC Energy. LNG volumes arrive at the country's two terminals, Marmara Ereglisi in Tekirdag and the Aliaga terminal in Izmir.

Marmara Ereglisi has been in operation since 1994 and is owned by BOTAŞ. Its annual capacity is 8.2 billion cubic meters (bcm), or 290 Bcf, and has a maximum sendout capacity of 22 million cubic meters (mcm) per day. The Aliaga terminal is owned by EGEGAZ, with an annual capacity of 6 bcm. Its maximum sendout capacity is 16 mcm per day.

LNG accounted for 16% of the total supply (domestic production plus imports) in 2012. Imports of LNG from Algeria and Nigeria are generally purchased on long-term contracts, although some of the volumes from these two countries were purchased on the spot market, along LNG imports from other countries.

Turkey's monthly natural gas consumption and total import capacity, 2011

Coal

Coal-fired power plants are important to Turkey's electricity generation mix. The country imported 23% of its total coal supply in 2012. Volumes of imported coal may rise in the future as coal's importance for electricity generation increases.

Coal-fired power stations remain an important energy source for Turkey, and there is renewed interest in exploiting Turkey's domestic coal resources. Domestically produced lignite in particular makes an important contribution to Turkey's energy sector and power mix, and accounts for approximately 75% of the country's coal supply. EIA projects rising coal importance in Turkey because of the increase in electricity demand.

At the end of 2012, Turkey had total recoverable coal reserves of 2.3 billion short tons, according to BP's Statistical Review of World Energy 2013. Only 529 million short tons (MMst), or about 23%, was "hard coal" (anthracite and bituminous). The remaining 1,814 MMst consists of lignite coal reserves. In 2012, Turkey produced 81 MMst of total coal and consumed 106 MMst. About 40% of Turkey's lignite is located in the Afsin-Elbistan basin of southeastern Anatolia, while hard coal is mined only in one location, the Zonguldak basin of northwestern Turkey. Almost all of Turkey's coal imports are hard coal, which Turkey does not produce in sufficient quantities. Russia, Australia, and the United States are the main suppliers of Turkey's hard coal.

Graph showing Turkey's coal consumption and production, 2001-2012

Electricity

Following the restructuring of the electricity sector in the 1990s, both consumption and generation of electricity have expanded. Most of the electricity is generated with fossil fuel sources, although the government plans to displace at least some of this generation with nuclear power.

In 2012, Turkey's total electricity generating capacity was 56.1 million kilowatts and total net electricity generation was 228 billion kilowatthours. Turkey's electricity demand grew by more than 90% from 2001 to 2011, with much of the growth occurring between 2002 and 2008. Although demand fell in 2009 compared with the previous year because of the economic slowdown, in 2010 consumption increased by about 10% compared with the previous year.

Fossil fuel and hydroelectricity generation accounts for nearly all of Turkey's electricity. Fossil fuel sources account for the largest share of electricity generation, with natural gas as the most important source. Although Turkey does not currently generate any electricity from nuclear power, the government has been advocating construction of nuclear power plants in an effort to diversify Turkey's electricity supply portfolio.

Sector organization

The Turkish Electricity Authority (TEK), a state-owned vertically integrated company, controlled generation, transmission, and distribution of electricity in Turkey prior to economy-wide reforms in the 1980s. The government passed the first law to set up private participation in 1984 and began unbundling the Turkish public electricity sector in 1993.

In 2001, the government enacted the Electricity Market Law to set up a comprehensive electricity reform program. Under the law, the state-owned Turkish Electricity Generation and Transmission Corporation (TEAS) was split into separate generation, transmission, distribution, and trade companies, with a goal of eventual privatization of the generation and trade companies. Turkey has taken steps to create competitive wholesale trading and retail sales markets and plans to open the market for all customers by 2015. In addition, retail tariffs were changed to reflect the cost of generation, transmission, and distribution without subsidies.

The 2001 law created the Energy Markets Regulatory Authority (EMRA) as the regulator of the electricity market. It is tasked with issuing licenses for all market activities related to the electricity market, determining and approving regulated tariffs, and setting the eligibility limit for market opening. In addition, it is involved in drafting legislation affecting electricity markets, resolving disputes, and applying penalties. In March 2013, the Turkish government passed a new Electricity Market Law, establishing an independent regulatory and auditing mechanism for the electricity market.

The largest generation company is the state-owned Electricity Generation Company (EUAS), which controls about half of all generation in Turkey. The remainder of generation comes from independent power producers and firms given special state concessions to build and operate power plants.

Turkish Electricity Transmission Company (TEIAS) is the publicly owned enterprise that owns and operates the transmission system and is legally unbundled.

Fossil fuels

Fossil fuel sources have historically been Turkey's largest power source. Natural gas-fired power plants have increased substantially in the past decade and now comprise more than half of the country's fossil fuel generation (43% of total generation in 2012). There are plans to build additional gas-fired generators, although the construction of these plants will depend on government policy and whether enough natural gas supply is available. Recent announcements by government officials indicate that the country is planning to decrease its share of natural gas-fired generation and to replace that with other sources, including nuclear power and coal.

Nuclear

Turkey signed an agreement with Russia in 2010 to build Turkey's first nuclear power plant in Akkuyu, on the Mediterranean coast. The plant would have four units with a total capacity of 4.2 gigawatts and begin operating around 2020. Russian investors, namely Rosatom, agreed to finance a large proportion of the project. However, several Turkish ministries still need to approve the project before formal construction begins.

Notes

  • Data presented in the text are the most recent available as of April 17, 2014.
  • Data are EIA estimates unless otherwise noted.

Sources

Associated Press Newswires

BBC

BOTAS

BP Statistical Review of World Energy 2013

Cambridge Energy Research Associates

Cedigaz

CIA World Factbook

Eastern Bloc Research

EBRD

Economist Intelligence Unit Country Reports

Energy Intelligence, Nefte Compass

EUROCOAL

Eurostat

FACTS Global Energy

Global Insight

International Energy Agency

International Monetary Fund

OECD

Oil and Gas Journal

PFC Energy

Reuters

TPAO

U.S. Energy Information Administration

U.S. Geological Survey