Turkish Natural Gas Market in Light of Global Energy Trends

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“

Turkish Natural Gas Market in

Light of Global Energy Trends

”

Batu Aksoy Batu Aksoy

Board Member

Board Member –– PETFORMPETFORM

CEO & Board Member

CEO & Board Member –– Turcas PetrolTurcas Petrol

22 March 2011

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About PETFORM

Established in 2000, PETFORM has played a crucial role in the transfer of private sector views to the public authorities regarding to

Turkish energy legislation amendments (Natural Gas Market Law, Petroleum Market Law,

Turkish Petroleum Law…)

Member companies mainly have activities in 2 sectors:

• Exploration & Production Sector • Natural Gas Market

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PETFORM Member PETFORM Member 45 Energy Companies 45 Energy Companies • AKENERJI • AKSA DOGALGAZ

• ALADDIN MIDDLE EAST • ATTILA DOGAN INSAAT • AVRASYA GAZ

• AYGAZ DOGAL GAZ • BM INSAAT • BOSPHORUSGAZ • BP • ÇALIK ENERJI • DOGAL ENERJI • EDISON • EGE GAZ • ENEL • ENERCO ENERJI • ENERJISA • ENI • E.ON RUHRGAS • ERDGAZ • EWE ENERJI • EXXONMOBIL • GENEL ENERJI

• GÜNEY YILDIZI PETROL • IBS RESEARCH • NATURGAZ • N.V.TURKSE PERENCO • OMV • OPALIT • PALMET • PETOIL • PETROL OFISI • POZITIF DOGALGAZ • SHELL ENERJI

• SOCAR & TURCAS ENERJI • SOYAK ENERJI • STATOIL • TEKFEN INSAAT • TEMI • THRACE BASIN • TIWAY TURKEY • TOTAL • TRANSATLANTIC TURKEY • TURCAS • TURUSGAZ • ZORLU DOGALGAZ

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PETFORM Members

PETFORM Members’’ Value in Value in

Turkish Economy (2010)

Total Turnover : 35.7 billion USD

(5% of GDP)

Total Tax : 2.1 billion USD

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World Population Growth

(1950

(1950 –– 2050)2050)

Source:

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World GDP Growth

(2005

(2005 –– 2050)2050)

Source:

(7)

GDP & Energy Demand

Growth (1980

Growth (1980 –– 2005 2005 –– 2030)2030)

Source:

Source:ExxonMobilExxonMobil Energy Demand

Energy Demand GDP

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World Primary Energy

Demand (2007

Demand (2007 –– 2030)2030)

Source:

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Energy Demand By Sector &

By Fuel (1980

By Fuel (1980 –– 2005 2005 –– 2030)2030)

Source:

Source:ExxonMobilExxonMobil By Fuel

By Fuel By Sector

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Power Generation Fuel

Demand (1980

Demand (1980 –– 2005 2005 –– 2030)2030)

Source:

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Share of Non

Share of Non--Fossil Fuels in Fossil Fuels in Power Generation

Power Generation

Source:

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Primary Energy Investment

Requirement (2007

Requirement (2007 –– 2030)2030)

Source:

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Distribution of World Oil

Reserves (1989

Reserves (1989 –– 2009)2009)

Source:

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Global Oil Trade Routes

Source:

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World Oil Transit Choke

World Oil Transit Choke--pointspoints

Source:

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Distribution of World Gas

Reserves (1989

Reserves (1989 –– 2009)2009)

Source:

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Global Gas Trade Routes

Source:

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Distribution of World Gas

Reserves

Source:

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NOC & IOC Production Trends

(2007

(2007 –– 2015 2015 –– 2030)2030)

Source:

Source:IEAIEA

0 20 40 60 80 100 120 2007 2015 2030 mb/d 0 750 1.500 2.250 3.000 3.750 4.500 2007 2015 2030 bcm NOC

NOC IOCIOC

Oil

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Crude Oil Prices

(1861

(1861 –– 2009)2009)

Source:

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Oil Prices & Global Recessions

Source:

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Gas Supply

Gas Supply –– Demand Gap in Demand Gap in

Europe (2006

Europe (2006 –– 2030)2030)

Source:

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Europe

Europe’’s Gas Demand s Gas Demand Forecast (2006

Forecast (2006 –– 2015)2015)

Source:

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Europe

Europe’’s Gas Import s Gas Import Dependency (2005

Dependency (2005 –– 2030)2030)

Source:

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Corridors to the European

Gas Market

Source:

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Gas Pipelines via Turkey

Source:

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Energy Demand

Energy Demand –– Domestic Domestic

Production Balance (1990

Production Balance (1990––2009)2009)

1990 1995 2000 2005 2009

Demand (million toe) 52_.9 80_.5 91_.3 0_.8 106_.1 Production (million toe) 25_.6 26_.7 26_.1 24_.5 30_.3 Import (million toe) 30_.9 39_.7 56_.3 73_.4 82_.1 Export (million toe) 2_.1 1_.9 1_.5 5_.1 6_.8 Bunker Fuel (million toe) 0_.3 0_.4 0_.4 0_.6 0_.6 Net Import (million toe) ₂₈_.4 ₃₇_.3 ₅₄_.2 ₆₇_.6 ₇₄_.7 Coverage of Domestic

Production to Total Consumption (%)

48.1 42.0 33.1 26.9 28.5

Source:

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Primary Energy Consumption

Primary Energy Consumption ––

Production Balance (2009)

Resources Coal + Lignite

Other

Solid Fuels Oil

Natural

Gas Renewables Total

Primary Energy

Production (million toe) 16.9 5.1 2.3 0.6 5.2 30.3 Share in Primary Energy Production (%) 55.9 17.0 7.8 2.1 17.2 100.0 Primary Energy Consumption (million toe) 30.4 7.1 30.5 32.8 5.2 106.1 Share in Primary Energy Consumption (%) 28.7 6.7 28.8 31.0 5.0 100.0 Coverage of Production to Consumption (%) 55.6 72.0 7.7 2.0 100.0 28.5 Source:

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Primary Energy Production

Primary Energy Production ––

Consumption

Consumption BalanceBalance (200(20099))

Distribution

Distribution of Productionof Production

(

(30.30.33 millionmillion toe)toe)

Distribution of Consumption

Distribution of Consumption (10

(106.6.11 millionmillion ttooe)e)

Source:

Source:MENRMENR

Share of Imported Energy Resources:

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Development of the

Turkish Natural Gas Market

1987

1987 19981998 20032003 20052005

Market

Market DevelopmentDevelopmentBasedBased on Russian Gas

on Russian Gas

Increase

Increase ininGas Gas

Supply

Supply SourcesSources Liberalization Liberalization First Steps in First Steps in Process Process Market Market Development in Development in Liberalization Liberalization Process Process Preparation Preparation Process Process USSR

USSR–– Turkey Turkey ContractContract(18.09.1984)(18.09.1984)

Contract

Contract?? 1 1 àà14.02.1986 (6 14.02.1986 (6 bcmbcm)) Russia

Russia -- Turkey (29.08.1997 & 15.12.1997 Turkey (29.08.1997 & 15.12.1997 –– Blue StreamBlue Stream))

LNG

LNG Supply Supply from Algeria (1998)from Algeria (1998) Contract

Contract?? 2 2 àà10.12.1996 (10.12.1996 (TurusgazTurusgaz))

Natural Gas Market Law

Natural Gas Market Law((03.03.200103.03.2001)) Gas

Gas Supply Supply fromfromIran (2002)Iran (2002)

Contract

Contract?? 3 3 ààFebruary 1998February 1998

Blue Stream Project (

Blue Stream Project (DecemberDecember2002)2002)

2005

2005 -- 20102010

•

•2005 Nov 2005 Nov –– Contract Contract ReleaseRelease Tender to be doneTender to be done

•

•2006 2006 DecDec –– Announcement of Tender ResultsAnnouncement of Tender Results

•

•2007 2007 Dec Dec –– FirstFirst Private ImporterPrivate Importer’’ssAccess Access into Market into Market

•

•2009 Jan 2009 Jan –– SecondSecond Private ImporterPrivate Importer’’ssAccess Access into Market into Market

•

•2009 Apr 2009 Apr –– Other Two Private ImportersOther Two Private Importers’’Access into MarketAccess into Market

•

•2009 May 2009 May –– LNG ImporterLNG Importer’’s Access into Markets Access into Market

•

•2009 Jun/Jul 2009 Jun/Jul –– Wholesale Companies Access into MarketWholesale Companies Access into Market

•

•2010 Jan 2010 Jan –– 5 Wholesale Companies in Operation5 Wholesale Companies in Operation

2009 2009

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Gas Purchase Agreements

Contract Date of Signature Date of Operation Duration (Years) Volume (Plateau bcma) Date of Expiration

Russia (West) Feb 1986 Jun 1987 25 6 2011

Algeria (LNG) Apr 1988 Aug 1994 20 4 2014

Nigeria (LNG) Nov 1995 Nov 1999 22 1.2 2021

Iran Aug 1996 Dec 2001 25 10 2026

Russia (B.Stream) Dec 1997 Feb 2003 25 16 2028

Russia (West) Feb 1998 Mar 1998 23 8 2021

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Distribution of Gas Import

Based on Source Country

2009 2009 20102010 Russia Russia 19.894 (55.6%) ? 17.576 (46.9%) Iran Iran 5.253 (14.8%) ? 7.766 (20.7%) Azerbaijan Azerbaijan 4.960 (13,8%) ? 4.521 (12.1%) Others Others 5.648 (15.8%) ? 7.593 (20.3%)

(Algeria + Nigeria + Ege Gaz)

---35.755 bcm ? 37.456 bcm

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Distribution of Gas Imports

Bewteen State and Private

Bewteen State and Private SectorSector

2009 2009 20102010 BOTAS BOTAS 33.068 (92.5%) ? 31.730 (84.7%) Private Co Private Co’’ss 2.687 (7.5%) ? 5.726 (15.3%) ---35.755 ? 37.456

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Gas Supply

Gas Supply –– Demand Balance Demand Balance

(1990

(1990 –– 2024)2024)

Source:

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Turkish Natural Gas Market in Light of Global Energy Trends

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