turkey-the strategic energy connector ok

10TH EURASIAN ECONOMIC SUMMIT - ISTANBUL 2007

May 2 - 4, 2007 organizer: marmara group foundation 1

T U R K E Y

THE STRATEGIC ENERGY CONNECTOR BETWEEN

EUROPEAN UNION AND

GREATER CASPIAN SEA REGION



SECURING THE ENERGY SUPPLIES FROM THE

CASPIAN SEA TO THE EUROPEAN UNION

• HOW CAN WE FIX THIS PROBLEM ON

LONG – TERM BASIS?

• HOW CAN WE ELIMINATE THE ACTUAL

MONOPOLE AND THE POLITICAL PRICE?

• CAN WE DEVELOPE A COMMON EU

STRATEGY ?

• ARE THE EU CITIZENS READY TO INVEST

IN THE FUTURE OF THEIR COMMON

HOUSE?



Sources of Natural Gas Supply 2005 - European Union

2004

- Indigenous Production 55%

- Net Imports 45%

2005

- Indigenous Production 52%

- Net Imports 48%

55,0%

13,3%

52,0%

14,0%

18,3%

0,3% 3,4%

Source: EUROGAS

Import Norway

Import Russia

Import Algeria

Import Others

IndigEnous Production

12,5% 12,3%

18,9%



NORWAY

(0%)

SWEDEN

(35.3%)

GERMANY

(40.5%)

POLAND

(98.1%)

CZECH

REP.

(94.2%)

BELGIU

M

(41.9%)

NETHERLAN

DS

(31.0%)

AUSTRIA

(46.1%)

DENMA

RK

(2.1%)

SLOVAKIA

(100%)

HUNGARY

(93.1%) SWISS

(0%)

ITALY

(26.1%)

FINLAND

(79.8%)

FRANCE

(23.1%)

“FRIENDSHIP”

(“DRUJBA”) OIL

PIPELINE

30% OF THE OIL IMPORTED BY EUROPE (1.2MBPD) COMES FROM RUSSIA. HALF OF THAT TOTAL IS PUMPED THROUGH BELARUS VIA THE “Friendship” (“drujba”) pipeline. In paranthesis are the percentages of oil supplied by russia in 2005 to various european countries. . source: bank austria creditanstalt

EU – 15:

27.1% (2005)



Greater CASPIAN REGION major OIL PIPELINES

Aktau-Baku

(proposed)



CEYHAN OIL TERMINAL



4,000 bcm

~83 years s

47,570 bcm

~80 years

1,770 bcm

~22 years s

33,530 bcm

~183 year s

4,520 bcm

~43 years s

Gas Reserves around Europe

47,570 bcm / 80 years (40% - from

turkmeNISTAN)°

33,530 bcm / 183 y 4,520

Bcm / 43 y

1,770 bcm / 22 y

4,000 bcm / 83 y



BTC Pipeline

Aktau-BTC Project

Natural Gas Pipeline

Türkmenbasi

aktau

horasan

erzurum

ceyhan

sivas

kayseri

B t e

baku

B t c

Trans - caspian

Pipeline project

T c p

Greater caspian region:

major implemented energy corridors



Baku

Tbilisi

Erzurum

Aktau

Ashkelon

B T E

NABUCCO Vienna BLUE

STREAM

Turkmenbashi

ROTRAZ

GU-EU

CONNECTING CASpian REGION WITH EU: THE BACKBONE OF GAS PIPELINES GRID



1. A new energy policy for europe

PROPOSAL FOR THE DECALOGUE of the EU energy package

(I)

In practice that means for europe:

TAXING “DIRTY” ENERGY AND INVESTING IN NEW, CLEAN TECHNOLOGIES; PHASING OUT SUBSIDIES AND INCENTIVES BINDING SECTORAL TARGETS CREATING A DEDICATED EU LEGISLATIVE AND BUDGET FRAMEWORK

2. GAS & ELECTRICITY INFRASTRUCTURE

3. INTERNAL MARKET FOR GAS & ELECTRICIty



4. RENEWABLE ENERGY ROADMAP

5. BIOFUELS

6. LIMITING GLOBAL CLIMATE CHANGE TO 2°C

7. TECHNOLOGY ACTION PLAN

8. SUSTAINABLE FOSSIL FUELS

9. ENERGY SECTOR INQUIRY RESULTS

PROPOSAL FOR THE DECALOGUE of the EU energy package

(II)

10. NUCLEAR POWER



10. NUCLEAR POWER

REPRESENT ONE ENERGY OPTION WITH A MAJOR ROLE TO PLAY IN THE FIGHT AGAINST CLIMATE CHANGE

NUCLEAR IS ONE OF THE CHEAPEST LOW – CARBON ENERGY SOURCES

THE DECISION ON WHETHER OR NOT TO USE NUCLEAR POWER RESTS WITH MEMBER STATES

THE COMMISSION should DRAW UP A NEW NUCLEAR ENERGY FRAMEWORK TO HELP MEMBER STATES WHICH CHOOSE NUCLEAR

IN PARTICULAR, NEW RULES ARE NEEDED FOR WASTE MANAGEMENT AND DECOMMISSIONING FUNDS

EU should CONTINUE ITS WORK TO DEVELOP NUCLEAR FUSION

PROPOSAL FOR THE DECALOGUE of the EU energy package (IIi)



2

china

japan

South korea

taiwan

india

9

56

20

6

15

3

2

8

canada

usa

18

104

2

2

uk

sweden

lituania

23

1

2 1

1

ukraine

finland 4 russia 31 4

2

armenia

hungary

slovenia

Czech r.

germany

switzerland

spain

france

belgium

netherlands 1

7

59

9

5

17

6

1

4

iran 1

pakistan

2

1

bulgaria 4 2

romania 1 1

slovakia 6

South africa 2

15

10

brasil

argentina

mexico

9 3 china

japan 56 1

20 South korea

taiwan 6 2

india 15 8 2

2

1

18

1 1

23 23

1

443 nuclear reactor units under operation in 32

countries generates a quantity of 370 Gigawatts, representing

17% of the world electricity

The world map of energy generation by nuclear technologies

1

Nuclear energy quota in

electrical energy production

1. France

78% 3. germany

28%

2. suisse

40%

4. japan

23%

5. u.k.

22%

6. U s a

19%

443

27 Nuclear reactors under

construction

Nuclear reactors in operation



To sum up, EU foreign policy - REGARDING THE PROMOTION OF ALTERNATIVE ENERGY CORRIDORS FOR EUROPE, AVOIDING THE ACTUAL EXISTING SITUATION OF ENERGY MONOPOLE - SHOULD BE founded on:

• permanent support FOR Kazakhstan & Azerbaijan TO develop their oil and natural gas industries

• thIS development will bring economic growth AND

PROSPERITY, EU DUTY BEING to help them to become totally independent energy suppliers

• FULL support FOR EU companies involved in Central Asia in oil & GAS as well as in construction of pipelines

• Finally, EU should aims at reinforcing the role of Turkey in

the region AS A MAJOR STABILITY FACTOR, while at

the same time maintaining the policy of STOPPING NUCLEAR AMBITIONS of Iran

DEFINING A UNIQUE EU FOREIGN POLICY ON

ENERGY



EU MAJOR TASK: THE ENERGY

SECURITY

3 MAIN DIRECTIONS OF ACTIVITIES: 1. STRENGTHENING THE COOPERATION WITH RUSSIA ON MARKET ECONOMY BASIS & promoting «win – win» mutually agreed solutions (long-term «FUTURE» commercial contracts, linking the price with int’l stock exchange quotation, eu - BASED ENERGY COMPANIES PARTICIPATION IN «Blue stream» project)

2. CREATING A REAL COMPETITION BY Developing NEW alternative energy corridors CONNECTING caspian sea area to europe; TO REACH THIS TARGET, EU SHOULD

GRANT HIS SUPPORT TO BOTH AZERBAIJAN & KAZAHSTAN to become real PLAYERS on the energy market, FULLY ASSISTING THEIR ECONOMICAL AND SOCIAL EFFORTS

3. LARGE – scale promotion of nuclear energy



Major INVESTMENT PROJECTS

“Nabucco” PROJECT – THE NEW TRANSIT CORRIDOR FOR THE TRANSPORT OF NATURAL GAS BETWEEN CASPIAN SEA AND eu zone

“Nabucco” back – up: proposing to finqnce two NEW MAJOR GAS PIPELINES - as back-up of “nabucco”

Development of OIL MAJOR PIPELINE Constanta – Omisalj – Trieste

INCREASING THE UNDERGROUND STORAGE CAPACITY OF NATURAL GAS



”Nabucco” project

New gas supply route

To Europe - from Turkey

To Austria - via Bulgaria,

Romania & Hungary



BERLIN

WARSAW

PRAGUE

KIE

V

VIENNA BRATISLAVA

BUDAPEST

LJUBLJAN

A

ZAGRE

B

BELGRAD

E

BUCHAREST

SARAJEV

O SKOPJ

E

SOFIA

ROM

E

TIRAN

A

ISTANBUL

ANKARA

TUNI

S

ATHEN

S

ANKARA

VIENNA

SOFIA

BUCHAREST

ISTANBUL

BRATISLAVA

“Nabucco” Gas Pipeline Proposed Route

? ? ? budapest



“Nabucco” Gas Pipeline Figures

Length of the Pipeline est. 3,400 km

Capacity:

- Total capacity Turkey 25 - 30 bcmy -

Expected OFFTAKE 8 - 10 bcmy

in Transit countries - Total

capacity to Austria 17 - 20 bcmy

BAUMGARTEN TERMINAL

Total Investment for plateau level : euro 4.4 Billion

Start of operation : end 2011



Conducta

Transalpine

(tal)

GUEU – RO

???

NOVOROSSI

ISK

TENGIZ

OIL FIELDS

PITES

TI

EXPORT

TO

BOSNIA

NOVI SAD

TERMINAL

SISAK

TERMIN

AL

EXPORT

VIA DRUjBA

ROMANI

A

BURGA

S VLORE

ALEXANDROP

OLIS

CEYHA

N

BRO

DI

CPC

B T C

AMBO

DRUjBA

GDAN

SK

CONSTAN

TA

TERMINA

L

TRIESTE

erzurum

BTe gas pipeline Operational: Feb. 2007

2007: 8 BCMY

2012: 20 BCMY

T c p

Gas pipeline gueu

OMISALJ PANCE

VO

TERMIN

AL

SUPS

A

ADRIA

TRANSALPIN

E

operational pipelines

new projects

CONSTANTA - trieste

OIL PIPELINE CONSTANTA-PANCEVO-OMISALJ-

TRIESTE IN THE ASSEMBLY OF THE EUROPEAN OIL

HIGHWAYS NETWORK

EXPOR

T VIA

TAL



Gur-eu supsa

BTE

GASODUC

T TBILISI

Gr-eu

Gu-eu CONSTANT

A

ERZURUM

AUSTRIA,

hUNGARy,

Slovakia, suisse

GERMANy, POLand, czech republic

INSULA

SERPILOR

ODESSA

NABUCCO

TURKEY - GREECE – ITALY INTER-CONNECTOR /

16BCMY

PropOSAL1: TO INCREASE quantitIES, RELIAbilitY AND SECURITY LEVEL OF GAS SUPLIES TO EU

COUNTRIES BY IMPLEMENTING A SYSTEM OF 3 PARALLEL PIPELINES, COMPLEMENTARY (“back-up”)

TO “NABUCCO”

PROJECT TO BE implemented: (1) eastern EXTENSION OF bte GAS PIPELINE STARTING FROM erzurum;

(2 + 3) extending THE georgia – uKRAINe (GUR-EU) “UNDER – THE - BLACK SEA” GAS PIPE ALSO to

romania BY USING THE ROCKY “SNAKE ISLAND” (“insulA serpilor”) AS splittinging point & AS MAIN BASE

FOR THE INSTALLATION OF PUMPING equipment; (4) inCREASe THE ALLOCATED QUANTITIES FOR THe

NEW GAS HIGHWAY FROM SHAH DENIZ FIELD BY A COMMERCIAL ARRANGEMENT WITH AZERBAIJAN gaS PIPE 1: bTe / erzerum, TURKEY - greEcE – fyrom – albania – croatia - italY

gaS PIPE 2: GR – eu / constanta, ROMANIA – HungarY – austria – slovaKia – SWITZERLAND

gaS PIPE 3: gu – eu / odessa, UKRAINE – polAND – germanY – Czech republic

Developing the east – west energy corridor “GUr – EU”

(supsa – “under –the-BLACK-SEA” PIPELINE – split on

SNAKE’S ISLAND – to: CONSTANTA & ODESSA)



ODESSA

SUPS

A

GUR – EU 12…16 BCMY

GU – EU 6…8 BCMY

GR – EU 6…8 BCMY

INSULA SERPILOR

SUPPLYING CASPIAN GAS TO EUROPE VIA GEORGIA - BLACK SEA SUBMARINE PIPELINE – UKRAINE &

ROMANIA



DEVELOPING THE EAST – WEST ENERGY CORRIDOR VIA TURKEY GAS

PIPELINES GRID & “TR – EU” BLACK SEA SUBMARINE PIPELINE

ZONGULDAK - CONSTANTA BLUE

STREAM

BTE

ERZURUM

ZONGULDAK



TR – EU 12…15 BCMY

Constanta

Zonguldak

UE /8…12 BCMY

From Erzurum BTE

A NEW EAST – WEST ENERGY CORRIDOR VIA TURKEY GAS PIPES GRID &

“TR – EU” UNDER - THE - BLACK SEA PIPELINE ZONGULDAK – CONSTANTA (II)



“rotraz” Gas Pipeline

Market Shares result from . . .

Cost competitiveness vis-a-vis other new

projects for Large gas fields in Central

Asia / Middle East Supply diversity –

relative to already linked sources

rotraz partners take-off gas to partially

meet their future gas demands



“ROTRAZ” Gas Pipeline

Strategic Goals of Project

Gas supply for Europe from Caspian

Region / Central Asia / Middle East via

Turkey – Botas Grid

Raise transit role of participating

countries

Contribution to security of supply for

partner countries and for Europe as a

whole



“ROTRAZ” Gas Pipeline Figures

Underwater Length of the Pipeline: est. 320 km

Capacity (Only Shah Deniz – Phase II):

Total capacity to Turkey 15 - 20 bcmy

Expected Off-take 7 - 10 bcmy

(in Transit Countries)

Total capacity to Austria 8 - 10 bcmy

(Baumgarten Terminal)

Investment for Under-The-Sea pipeline : euro 0.8 BN

Start of operation : end 2012



ITALY

(26.1%) Constanta

POTENTIAL MAJOR PIPELINES SUPPLYING NATURAL GAS FROM

GREATER CASPIAN REGION TO CENTRAL & EASTERN EU COUNTRIES

INPUTS

CONSTANTA

ROMANIA

FROM ERZURUM - ZONGULDAK



marius – eugen opran, ph.d.

group I / ten & rex

turkey-the strategic energy connector ok

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