Natural Gas Policies of Turkey: The Role as a Transit Country

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TABLE OF CONTENT

CHAPTER 2: CURRENT SITUATION AND TURKEY'S ENERGY MIX3

Introduction3

Current Structure of Turkish Energy Market3

Turkey's Energy Profile6

Turkey's Primary Energy Mix7

Oil and Gas8

Coal10

Nuclear11

Renewables12

Conclusion13

REFERENCES14

CHAPTER 2: CURRENT SITUATION AND TURKEY'S ENERGY MIX

Introduction

This chapter provides a review of the historical background of Turkish energy sector and briefly summarizes the key players in the Turkish energy market, as well as the current situation of Turkey's energy market (Soyhan 2009, p. 1350).

Current Structure of Turkish Energy Market

Soyhan (2009) maintains that during the first years of the country, most of the energy was utilised for heating purposes rather than industrial and commercial purposes and the oil was used for illuminating purposes and petroleum was discovered first in 1940 by Institute of Mining Technique (MTA) (Soyhan 2009, p. 1350).

From 1930 to 1950 the government applied nationalisation policy in Turkish energy sector and almost all energy industry had been replaced to the public domain (IEA 2010, p. 4). Within this period, the Turkish government started the 'development plans era' and aimed to apply liberal economy across the country (Hepbasli 2005, p. 311). The increase in production and consumption of energy depends on industrialisation and economic development, while consumption of energy continuously increased in commercial and industrial sectors” (Soyhan 2009, p. 1350). Again in this period, General Directorate of State Hydraulic Works (DSI), the Turkish Petroleum Corporation (TPAO), Turkish Atomic Energy Authority (TAEK) and Turkish Coal Association (TKI) were established (Soyhan 2009, p. 1350).

TPAO was established in 1954 and was responsible for exploration, drilling, production and well completion, as well as natural gas storage, participation to oil and gas pipeline projects and oil trade, distribution, and transportation (Soyhan 2009, p. 1350). Therefore, TPAO is a vertically integrated national oil company of Turkey (IEA 2010, p. 4). “TPAO by itself provides about 80% of the Turkey's total oil output, which is currently around 56,000 billion barrels per day (bbl/d), down from 90,000 bbl/d in 1991” (Kilic and Kaya 2007, p. 1312).

In December 1963, The Ministry of Energy and Natural Resources (MENR) was established and responsible for the energy policies of Turkey (Soyhan 2009, p. 1350). The establishment of Turkish Electricity Administration (TEK) in 1970 has occurred, which was a monopoly in Turkish electricity sector at all stages and TEK became a national vertically integrated monopoly in 1982 with the transfer of distribution to it (Soyhan 2009, p. 1350). In 1982, all the electrical installations and networks belonging to municipalities and unions were transferred to TEK. Since then, all energy sales including villages have been conducted by TEK (Soyhan 2009, p. 1350).

In order to restructure Turkish energy sector, MENR set up some privatization models. Atiyas and Dutz (2003) maintain that “beginning in the 1980s, the government sought to attract private participation into the industry. This was motivated both by a general disposition towards the private sector that emerged in the 1980s and fiscal constraints, purportedly to ease the investment load on the general budget”.

“Under the TOR model, the private company would ...