EURASIA CRITIC APRIL 2010 by EURASIA CRITIC NEWS AGENCY

European Union Energy Expectations By Dimitris Tsarouhas

April 2010

Supply Perspectives of Russia By Ozer Cetinkaya

ENERGY SECURITY OR GLOBAL CONTENTION

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EurasiaCritic April 2010 Vol. III ISSUE 1 Monthly Magazine on Eurasian Politics Published every month by Eurasia Critic Yayincilik Ltd. Head Office: Esat R. No: 55/5 Kucukesat ANKARA/TURKEY T: 0090 (312)4170383 F: 0090 (312)4170392 Publisher Hakki AHMETBEYOGLU Editors Ozer CETINKAYA Ali ALTAN Assistant Editor Caglar KURC Burcu OZCELIK Volkan GUNER Regional Directors Middle East Yousuf AL SHARIF Southestern Asia Fazal-UR-RAHMAN Caucasus Hasan KANBOLAT Balkans Ibrahim ARSLAN India Prof. Dr. Ajay Kumar PATNAIK Azerbaijan Ganire PASHAEVA Syria Ibrahim HAMIDI Kazakhstan Murat SHAHANOV Uzbekstan Ali KULEBI Japan Prof. Dr. Masanori NAITO Energy Strategies M. Mete GOKNEL Nuclear Studies Prof. Dr. Saleh SULTANSOY Millitary Affairs David AXE

UK Represantative Gizem Fowler Jamie Fowler

EU-Turkey Energy Security By Bahadir Murat Akin

New Energy Bridge: Pakistan By Ali Kulebi

Turkey-China: Towards onto an Energy Partnership By Abdulkadir Emin Onen

Turkish Energy Industry Report

Advisory Committee George HEWITT Nuzhet KANDEMIR Ismael HOSSEIN-ZADEH Norman STONE Ali KULEBI Media Director Cigdem BEDIZ Photography Provider: AFP Illustrations Mahmut KARATOPRAK Distribution Manager Mert ALTAN ISSN 1308-1560 Printers: Basak Matbaacilik HOW TO CONTACT US General enquiries: 0090 (312) 4170383 info@eurasiacritic.co.uk Letters to the Editor : editor@eurasiacritic.co.uk ©2010 Eurasia Critic News Agency Ltd. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Eurasia Critic News Agency Ltd.

The EU’s Energy Politics By Dr Dimitris Tsarouhas

Supply Perspectives of Russia Kremlin Winking at NABUCCO By Ozer Cetinkaya

Nuclear Energy Gift By Prof. Dr. Sumer Sahin

Choice of Ukraine By Shemsey Vodinov

Turkey’s Policies for New and Renewable Energy By Emin Koramaz

Source of Conflict and Life: Energy Future of Iraq By Volkan Güner

Liberalization Problems of Turkish Energy Market By Sureyya Yucel Ozden

Hidden Cost of Dirty Energy By Korol Diker

Energy Security Possibility of an Alliance against China

oal, oil, natural gas, water and nuclear energy are still prior on constructing the international strategy. This priority will be effective in the first quarter of 21st century. Partly determined rules on energy will be reshaped. Reconstructing the balances between suppliers and demanders will cause problems. This situation derives from the suppliers’ desire of having more control on their supplies. Regional minor conflicts will be maintained if big demanders continue to insist about holding their advantages in energy market. This fundamental factor which will determine the energy security and stability in 21st century, may establish two options: 1. Global depression caused by sudden increase of prices which is a result of climate change by the reactivation of the coal. 2. Finding solutions by giving reciprocative compensations and establishing stability after a international cooperation period.

Oil as Determiner

Editorial 4

EurasiaCritic April 2010

Countries’ hydrocarbon demand is increasing in accordance with economic enlargement. With this picture, it is foreseen that Europe’s dependency on both oil and gas will increased to a huge amount at the year 2020. Developing Eastern Europe will be effective on this increase. Another determiner of price increase is the slipping of the developed countries’ investments towards

Eastern Europe because of the low labor cost. Those energy resources which are determiners of world powers’ strategy are mostly located in the Eurasia. %67 of world’s oil production is held in this region. EU provides almost all of its oil demand from this region and this oil trafficking is so much effective on political power struggles. Europe desires to affect the political transformation of Caspian Countries. Caspian countries are getting closer to Russia against this tendency of Europe. Oil demand will increased by %33 in the future 25 years and when this situation is taken into account with western pressure, an upcoming crisis can be predicted. Crisis would be more destructive if the Iran threat and Iraq’s instability come into the account.

Developing Economies If US meets its energy demand, EU economy have difficulties because US has the highest amount of demand chart. Results of a distribution clash will be negative for developing countries especially Far East Market. Negative effects of this progress on a developed country Japan should be considered as well as China’s growth rate will be harmed from it. Growth curve is one of the main determinants of the energy security and stability. General situation of known oil reserves in the world: Middle East oil reserves.

North Africa oil reserves. West Africa oil reserves. Alaska oil reserves Latin America oil reserves Caspian oil reserves West Siberia oil reserves South China Sea oil reserves should taken into consideration. These areas have vital importance for US, EU and developing countries especially for China. Domination conflicts upon those areas have a strategic importance. Strategies which are built in opposition to each other are establishing threats among energy security. Countries may risk the energy security because of their clashing strategies. New arrangements may appear into the agenda for energy security. Negotiations such Kyoto which do not finalized may endanger energy security more.

Clash of Needs It is expected that US oil consumption will increase to 27.5 million barrels per day towards the year 2020. On the other hand US natural gas consumption will be 1.020 billion cbm in 2020 according to the calculations. Oil and Natural gas reserves are mostly in Middle East, Caspian Region and Central Asia. Countries located in these regions are seen as unstable because of their regimes according to the consumer countries. Energy agreements are usually objected by their functioning and their sustainability.

West Africa gains importance in this process. US and EU sensibility upon this region increases because of the oil reserves in this region. Sao Tome which is known with its rich oil reserves faced with interventions in the recent years. Liberia is also stressed with internal conflicts. All these conditions brings the US intervention on the region as an option. US is trying to take gain the advantage before EU just like US did in the Iraq Case. Events which are established by global economic crisis are appeared with the objection of Euro may lead a closed trade war between US and EU. US Dollar reserve advantage over Euro, enforces Europe to choose alternative ways. According to the perspective of energy security and supplier countries, increasing demand of China and India should be considered.

Position of the Suppliers Among the predictions brought up, existence of 70-150 billion barrels of oil in the Central Asia and Caspian Region is assumed. According to some analyzes this amount may reach to 200 billion barrels. According to all assumptions Central Asia oil reserves come up with its vulnerability to conflict just like West Africa. After establishing bases in Afghanistan, US action of establishing bases between Georgia and Central Asia threatens the energy security. Russia

and US are performing an open profile conflict while China and EU are performing low profile actions. Results of the struggle points out the Russia as the more powerful one. This situation may cause instability which could even affect China too. US states may intervene on the supplier countries which will try to establish partnerships against US interest. This kind of an action is a huge threat for European Energy Security.

Possibility of an Alliance against China China’s growth rate and speed of growth shows the Chinese political and economic goal to own a hinterland in Eurasia. Transformation of China’s economic power into a political and military power will affect region countries Russia and India as well as US and EU. Chinese hunger to Eurasia oil reserves and South China Sea oil reserves may direct this group of countries to establish a deterrent alliance in the region. Just like Kissinger’s strategy of playing the China card against USSR. Reverse of the Kissinger case may happen. US behavior of breaking Russian Energy Monopoly may turn into a different direction. Washington will act towards the transporting Caspian and Central Asia oil to the West for preventing China to use these oil reserves as a last resort. EurasiaCritic April 2010

Energy Security

EU-Turkey Energy Security By Bahadir Murat Akin

he continual resistance of the main actors in Europe to show clear, coherent and a unified initiative concerning the need to enhance its relations with the resource rich Central Asian Republics through its advantageous relationship with Turkey, in spite of the encouragement of the US is causing the western hegemonic project to potentially wither away with the loss of “The Grand Chessboard”1 to Russia and China’s common initiative, the Shanghai Cooperation Organization. The strategic partnership between the EU and the US requires both to mutually help secure the opposites security interests. The western hegemonic project requires not just the physical and border security of the EU which is being developed through the neighborhood policy attempting to expand European influence to the former dominions of Russia in Eastern Europe, the Caucuses and far as the Central Asian Turkic Republics (in opposition to the

EurasiaCritic April 2010

Russian ‘Near Abroad’ policy and the to enhance European regional security Shanghai Cooperation Organization- and influence in its immediate region through mutual deSCO). A similar atpendence. tempt is found in the The western Most authors anadevelopment of the hegemonic project lyzing energy security Euro-Mediterranean requires not just cite Turkey as crucial cooperation through the physical and for Europe to mainthe Barcelona Process border security of the tain its energy security (in opposition to inby diversifying its gas creasing economic inEU which is being sources, decreasing terests and influence developed through the Europe’s dependence of China in the region). neighborhood policy on gas provided by The security of the attempting to expand Russian Federation European energy supEuropean influence to sources, in light of ply, required for the the former dominions the clear utilization of maintenance of its inenergy supply as a podustry and economy, of Russia in Eastern litical tool to further through diversification Europe, the Caucuses Russian interests. of sources of energy and far as the import by building new Central Asian Turkic Russia transit ways and seRepublics. curing the continuous The European flow through current need to diversify gas bl p rt of th ones is also an inseparable part the supply l h has b been apparent since the above mentioned projects developed declaration of the new Russian military doctrine by Vladimir Putin in 2000 that outlined its new security objectives. This declaration was followed by the “Energy Strategy of Russian Federation until 2030” in 2003. Which clearly constituted a warning to countries dependent upon Russia’s energy supply was made clear by the inclusion of the following in the preamble: “Energy resources will constitute an instrument of Russia’s foreign policy”2 This declaration was followed by the agreement of cooperation between Gazprom and the Russian Ministry of Foreign Affairs. Evidence suggests that this development was premeditated. All the Ambassadors of the Russian Federation were recalled back to Moscow for the first time in 16 years to reassess Russia’s foreign policy concept where

Energy Security

future relations with EU in the areas of petrol constitutes 7% and 56% of the economics, security and energy policies gas exported in the world.4 were discussed on 12 July 2002.3 The Ambassador of the republic Russia appears to have found its of Ukraine to the Republic of Turkey states: ultimate soft weapon “energy resources against its opponents: Russia appears to have and energy policy beRussia controls 33% of found its ultimate came a geopolitical the world natural gas soft weapon against weapon even more reserves and 5% of the its opponents: Russia dangerous than conworld’s petrol reserves. controls 33% of the ventional military Meanwhile it is one of arsenal…it would the two countries geoworld natural gas take a middle sized strategically positioned reserves and 5% of the war to leave millions as an access route for world’s petrol reserves. of homes in Europe Asian gas on route to without heating and Europe. As for prohot water; and duction Russia’s share off the h world ld gas h d heavy industry almost market is 24% and 9% of the world pet- ruined without sources of energy. But it rol market. In respect of export Russian took only two weeks for Russia cutting

off gas supply to the EU and Turkey to seed a chaos in Brussels, desperation in Sofia..”5 This statement bears witness to the current European energy insecurity, as 80% of gas going to Europe from Russia (which accounts for 41% of Europe’s gas imports)6 passes through Ukraine.

China The overshadowing of western ambitions in the region by the progress of the Shanghai Cooperation Organization is becoming a more distinct possibility. China is acting faster than Europe in integrating the Central Asian Republics economically to it. A gas pipeline is already being built to Kazakhstan7 and a new agreement has been reached for EurasiaCritic April 2010

Energy Security

a project that will bring Turkmen gas to ing continuous demands for further China after passing through Uzbekistan liberalization and democratization of and Kazakhstan.8 China and Russia these states. have used the SCO skillfully by develThe EU oping it into a quasi OPEC for gas and security alliance. It was soon after the This predicament that the EU finds Astana SCO meeting itself in will only conin 2005 that Uzbekitinue as the forecasts The EU could stan asked the US to reflect a 50% increase not provide any leave its K-2 Airbase in energy requiredefensive advantages on its soil with support ments by the year through enhanced from the SCO.9 This 2030.10 Unless there is relations while gives the SCO a masa sudden shift in techsive advantage against nology rendering fossil making continuous Europeâ&#x20AC;&#x2122;s neighborfuels obsolete, Europe demands for further hood policy as it susneeds to secure alterliberalization and tains Central Asian native sources of enerdemocratization of economies and further gy in order to diminish these states. integrates these states Russiaâ&#x20AC;&#x2122;s hegemonic to Russia and China objectives. At this for its defense security. Th The EU could ld point i the h US perceives the EUâ&#x20AC;&#x2122;s energy not provide any defensive advantages dependency on Russia as a security risk through enhanced relations while mak- to itself and is attempting to help the 8

EurasiaCritic April 2010

EU secure diverse sources of energy. In spite of US support, it has so far been the mistakes of the main actors of the EU that has hindered progress in securing energy sources needed for the rest of Europe. France has remained oblivious to the issue of securing alternative transit routes mainly because France derives nearly 80% of its energy demand from nuclear sources. France is also wary of the advantage Turkey would gain in its accession process to the EU if it becomes a vital route for energy for Europe. Germany has preferred to sidetrack a common European energy initiative in favor of bilaterally securing its energy needs through the Nord Stream Pipeline passing under the Baltic Sea that bypasses other transit routes. In order to avoid offending the private arrangement made with Russia, Germany has declined to support projects that would serve to benefit

Energy Security Europe as a whole.

The US and Turkey The overlap of American and Turkish agendas and interests concerning Europe’s energy security allows the two to be studied in parallel. The coherent policy of the US has been the greatest driving force for Turkey becoming an energy hub for Europe. It has even been repeated that the Baku-Tiflisi-Ceyhan pipe project, the first to bypass Russia to bring Asian gas to Europe has been credited as the greatest achievement of the Clinton administration. It is within the interests of the US and NATO to assist ist and support said projects as soft US perceives the EU’s policy tools that energy dependency on can be used until Russia as a security the hard policy backing of the US risk to itself and is is required. As it attempting to help was the case durthe EU secure diverse ing the 1991 Gulf sources of energy. war where even though it was not an NATO effort, it also France, l iinvolved l dF Britain and Italy that sought to prevent Iraqi control over Kuwaiti oil fields and threats to the oil supply from Saudi oil fields.11. The successful implementation of European projects to secure energy sources and transit routes automatically secures energy sources and transit routes to the US as well since any source that provides fuel for one would provide fuel for the other. The economic security of Europe will continue to be supported by the US as long as Europe continues to be dependent on the US for its own security (hence preventing Europe from becoming a military rival). At this point it is worth mentioning that the there is criticism in the US that ESDP All sources researched for this pacould develop enough to compete with per repeatedly state the need for EU NATO, however US policy makers be- not to push Turkey away. How Turkey lieve they can keep such aspirations in has been a loyal ally to the US and Eucheck while simultaneously diversify- rope since Turkey joined NATO in 1952 ing its military presence to other areas and supported allied efforts from Korea that might require it and is pressuring to Afghanistan. Repeatedly underlined Europe to take on a greater share of its is the necessity of the Nabucco projects military burden (without actually taking implementation as the Main Oil Pipeon all of it). line (MEP) for gas and oil derived from

the Caspian Sea and the Central Asian Republics for building of a mutually dependent relationship. This necessity has also been outlined by the Marc Grossman, Former Ambassador to Ankara (1994-1997) in his paper written in 2007. “There are many other pipeline projects in and around Turkey that can have a direct impact on us and EuroEurasiaCritic April 2010

Energy Security pean energy security...new East-West oil pipelines, in addition to the return to full capacity of the Kirkuk-Ceyhan pipeline, will bring more crude to market. East-West natural gas pipelines, including the proposed south Caucasus gas pipeline (Baku-Erzurum-Ceyhan) and the Turkey-Greece-Italy Gas Pipeline will transport this key commodity west. Projected North-lines, including the Samsun ceyhan oil pipeline and, perhaps some day, a Turkey-Israel oil gas pipeline, could also add to the West’s energy security… No one knows what the future holds in Russia, but dreams of a democratic Russia tied positively to Europe have faded, at least for now. Russia’s intimidation of natural gas customers, distortion of the goals of missile defense deployments and such makes it vital that NATO remains strong and that Turkey remains strongly committed to NATO. Instead, the EU must leave the door open to Turkey’s membership aspirations and make them dependent on Turkey’s own performance. Turks will need to work for another decade to fully meet EU standards. If the EU does not have its goal posts, Turkey will be a stronger society in 10 years, ready for full EU membership and even more ready to contribute to a Europe, and a neighborhood, whole, free and at peace…

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The Turkish government can act dors also does not prevent the pressure to promote tolerance in ways that are for foreign policy concessions (in the symbolically crucial, for instance open- form of opening the borders with Aring the land border with Armenia and menia for example). In spite of the fact opening the Greek Orthodox training that the EU and the US hegemonic amschool for priests in Istanbul. Ankara bitions require Turkey as a policy tool also needs to support basic freedoms in order to succeed, more than Turkey needs them. by abolishing the secThe pressures tions of the penal code Unless Turkey is used on the Turkish state which restrict freedom as the main bridge to continue to mount in of speech. Taking these Central Asian energy spite of the opportusteps would demonsources, the advantage nity to make demands strate that Turkey conof acquiring energy of its own. Turkey is a tinues on the road to a from its primary net energy importing more open, pluralistic country that needs to and tolerant society. source with lower secure its energy inBy paying active overhead costs will terests by the middle attention to Turkey’s seem a lesser loss then of the next decade. future today, US and the loss of the Central Energy security is European leaders can Asian Republics one of the few areas shape a positive outpolitically to Russia where the US and come and Turkey’s Turkey are in absolute success will further enand China. agreement. The insishance and European tence of US President security”.12 The accuracy of the predictions di i off Obama Ob d the EU to allow Turkey towards Marc Grossman, Former US ambas- to join reflects this. sador to Turkey, makes concerning the The US foresees European interests future function of Turkey is surprising, better than the EU itself does. The joinespecially when one considers that just ing of Turkey and the EU will secure recently the Kirkuk-Ceyhan pipeline transit lines for Europe while enhancwas reopened and an agreement was ing European relation with the east in signed with Israel to develop a new general. With Turkey as a member the pipeline the previous week.13 neighborhood policy can be expanded The lack of alternative energy corri- to include Azerbaijan and the Central Asian Republics which are wary of Russian monopolistic and imperialistic tendencies concerning their resources, as Russia prevents or attempts to block these states from diversifying their client base and enhance their relations with Europe. This arrangement will prove to be mutually beneficial for Turkey as well, since it would be difficult for Turkey to enhance its own relations with these states currently under Russian patronage without western backing, while securing energy at a lower cost for itself. The “diversification with Europeanization through Turkey”14 Should become the EU’s main foreign policy goal in order to achieve several objectives. Unless Turkey is used as the main bridge to Central Asian energy sources,

Energy Security

the advantage of acquiring energy from its primary source with lower overhead costs will seem a lesser loss then the loss of the Central Asian Republics politically to Russia and China. Europe needs to immediately tone down its demands on Turkey concerning the accession process and speed up the Nabucco project in order to, at this point not catch up but at least secure some vital resources in Central Asia. Anything less will make Europe nothing but a minor actor in world affairs and entirely dependent on Russia to sustain its economy, while also burdening and weakening the US for its lack of ability in defending its own borders. The inability of the EU to show clear initiative in developing a unified energy foreign policy in spite of clear warnings over the past ten year of future developments concerning its energy security interests, will continue to hinder the trans-atlantic hegemonic

project to a degree that if continued will cause irreversible damage to the project and even the trans-atlantic alliance itself once the control of the lifeline that sustains the European economic engine is out of reach. References 1 The title of the book by Zbigniew Brezinski written in 1997 that was meant to be a guide for American primacy and its geostrategic imperatives in “the only place where the pieces of the puzzle have not been set yet” 2 Sergiy Korsunsky, “Pipeline diplomacy: it is time to choose or get prepared”, The Diplomatic Observer, No:14, April 2009, p. 14 3 Nazım Cafersoy, “Bölgeler ve olaylar – Rusya –Ukrayna”, Stratejik Analiz, No:28 August 2002, p. 127 4 All information listed summarized from: http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/RUSSIANFEDE RATIONEXTN/0,,contentMDK:20888536~men uPK:2445695~pagePK:1497618~piPK:217854~ theSitePK:305600,00.html , accessed on 25/5/2009 5 Sergiy Korsunsky, “Pipeline diplomacy: it is time to choose or get prepared”, The Diplomatic

Observer, No:14, p. 14 6 J. Bielecki / The Quarterly Review of Economics and Finance 42 (2002) 235–250 247 7 Kazakistan-Çin doğal gaz boru hattı inşaatı başladı (Kazakh-Chinese gasp iple construction has begun), Referans, 09.07.2008 8 Türkmenistan-Çin doğal gaz boru hattının inşaatına başlanacak(Turkmen-Chinese gaspipline construction will commence), Referans, 08.04.2009 9 http://www.hindu.com/2005/07/08/stories/ 2005070800711400.htm , retrieved 04.06.2009 10 TMMOB: “ Enerji Raporu- 2006” (Energy Report-2006), yağmur ofset, Ankara, 2006, p.11 11 Paul Gallis, “NATO and Energy Security”, CRS Report for Congress, 2006, p.5 12 Marc Grossman, “Turkey: Key to US and EU Security and Defense Interests A Reflection”, CROSSROADS The Macedonian Foreign Policy Journal ( CROSSROADS The Macedonian Foreign Policy Journal), issue: 03 / 2007, pages: 116123, 13 Hurriyet, 2/6/2009 14 Vokan Özdemir, “Turkey’s role in European Energy Security”, Europe’s Energy Security, Central Asia – Caucasus Institute & Silk Road Studies Program, 2008 ,p.108 EurasiaCritic April 2010 11

Turkey-China

Turkey-China: Towards onto an Energy Partnership By Abdulkadir Emin Onen

n energy partnership agreement signed between Turkey and China while the Turkish President Abdullah Gül’s visit to China. A new era has been started between Turkey – China relationship with the signing of this agreement which can be seen in the analysis of the agreement below. Memorandum of Understanding on Cooperation in the Energy Sector which was signed between Republic of Turkey, Ministry of Energy and the National Energy Administration of the People’s Republic of China is primarily a cooperation memorandum. Cooperation areas and route map of Turkey – China partnership had been decided. According to the memorandum:

Proposed Cooperation Areas 1. Renewable Energy 2. Energy conservation and energy productivity 3. Rehabilitation of transformer substations and hydroelectric power plants jointly 4. Manufacturing electricity generation systems for the utilization of

renewable energy sources such as wind, solar, small water sources etc. 5. Hydrocarbon exploration and production 6. Mining Technologies 7. Boron Technologies 8. Production of solar energy equipment 9. Thermal power ( coal, oil and natural gas as power) 10. Hydroelectric Power Plants 11. Nuclear Energy This memorandum of understanding consists of 6 articles and it bases on the parties’ agreement to encourage their enterprises to discuss possibilities for bilateral and mutually beneficial cooperation in the energy sector in line with applicable laws and regulations of both countries. Memorandum of Understanding has a constructive property.

Importance of the Memorandum of Understanding MoU is important edge point for Turkish Foreign Policy and Turkey’s Asian Policy since the year 2003 but firstly it is important for bilateral rela-

tions of Turkey and China. Turkey formulated a new strategy towards Asia which is based on a economy – energy survey during the Justice and Development Party Government. Trade volume between Turkey and Asian Countries increased by 25% -30% between 2003 - 2009, this is a clear success of the new strategy of Turkey. Also Turkey’s interest is so much increased towards the Asia according to the Turkish Government visits to Asia. These visits do not only arranged for strengthen the diplomatic relations, they also have concrete results such as signing of Memorandum of Understanding. This MoU was signed during the President Abdullah Gül’s visit to China at 23-29 June. This was the first presidential visit to China after the Demirel’s visit in 1995. Important points come forward when interpreting the Turkey’s Energy Policy during Justice and Development Party Government. It should be underlined that Turkey is no more developing strategies on basis the of being an energy bridge but Turkey focuses on becoming an energy corridor and being a thermal country. Turkey is not only concentrating on becoming an energy corridor on east-west direction, Turkey also developing strategies to become a multidirectional energy corridor which includes north – south direction just like general Foreign Policy Strategy of Turkey. Turkey aims to become a global actor on energy with taking parts at the regional and global energy projects.

Turkey – China Relations To understand the China’s importance for Turkey, it should be stated that China is the biggest trade partner of 12 EurasiaCritic April 2010

Turkey-China

Turkey in the Far East and China is the 3rd country within the Turkey’s import ranking. Trade volume between Turkey and China is increased by 40% in 2008 in spite of the global financial crisis. In 2002, Turkey’s trade volume with China was $ 1.4 billion dollars, this trade volume is increased by 7-8 times and it is $ 14-15 billion dollars today. Briefly this MoU is signed in accordance with the developing economic relations between Turkey and China. This MoU is expected to strengthen the development and diversification of Turkey – China relations on a collaboration perspective. This collaboration memorandum will be a step on bearing Turkey – China relationship to a strategic level in the future. Turkey – Russia relations is a good example for proving the fact that developing energy-trade relation has a significantly positive affect on the development of political relations. China which has veto power in UN Security Council, has a potential for being a superpower in the near future. Cooperation between Turkey and China on politics become a stronger possibility by the development of en-

ergy cooperation between Turkey and also a turning point for energy relations China. in private. Countries which can provide On the other hand, China will invest energy security will be the main actors to Turkey according to the MoU and of international politics according to these investments will help Turkey to the energy security aspect. This Memmeet the deficits of Turkey-China trade orandum is a milestone for providing relation. According to the Chinese Per- Turkey’s energy security. China investspective, energy cooperation with Tur- ment to energy sector of Turkey, is an key and designation of Turkey as a stra- important contribution to efforts on tegic base (after the satisfying Turkey’s enTurkey President Gül’s ergy need and proving Chinese investment signing of a agreeTurkey’s energy securiof renewable energy ment on establishing ty. Chinese investment and nuclear energy a investment base in of renewable energy Turkey with Chinese and nuclear energy will will give the ability Huawi Company) will give the ability of mulof multiplying energy be an important boost tiplying energy sources sources for Turkey. for developing China’s for Turkey. Energy is Middle East Initiabecoming the most imtive. Turkey’s cooperation with world’s portant cooperation issue between Turpotential superpower China in Middle key and China in this sense. CooperaEast is not only an issue of energy sec- tion on producing energy with China is tor, it also provides important advan- strategically beneficial for Turkey. Turtages in world politics for Turkey. key – China energy cooperation is based on the strategy of bilateral cooperation Conclusion and win – win approach. Benefits which Energy Memorandum Article is a will gained through energy cooperation turning point for bilateral relations of in the future will give positive opportuTurkey and China in general and it is nities to both state and individuals. EurasiaCritic April 2010 13

Nuclear Turkey

Nuclear Energy Gift By Prof. Dr. Sumer Sahin

uclear energy is the main energy source of universe because all stars including sun produce their energy from fusion nuclear reactions. Fusion is the producing engine of the energy resources. All energy sources are transformation of the energy which is derived from fusion in the sun. World’s energy future will be shaped by nuclear energy for certain because density of nuclear energy is significantly higher than any other energy types. The main cause at heading towards nuclear

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energy in the 21st century is that nuclear higher than both hydraulic energy and technology is the locomotive engine of wind power by ~ 10000 times. Thermal developing high level technology and energy has been the main energy type electricity is a by product energy. The used in the 19th and 20th centuries. Denratio between the need of science and sity of nuclear energy is 10 million – 100 technology and the need of technology million times higher than conventional is equal. If you need thermal energy. Chemihigh level science and cal energy production Density of nuclear technology, you will per reaction is in the energy is 10 million need nuclear energy range of few electron – 100 million absolutely. Alternavolts, but energy protive energy sources duction from fission per times higher than cannot replace the reaction is 200 million conventional thermal role of nuclear enelectron volts and enenergy. ergy. ergy production from Hydraulic enfusion is 17 million elecergy and wind power have a very low tron volts. 1/5000 of natural waters are density of energy when they are com- heavy water. If extract deuterium from pared to conventional thermal energy, 1 lt of natural water and burn it in fuwhich is produced by chemical burning sion reactor, produced energy will be (coal, natural gas, oil) and its density is equivalent to the energy which will be produced from burning of 300 lt of benzine. Load factor of nuclear energy is also another important issue which shows the superiority of nuclear energy. Load factor of

Nuclear Turkey nuclear reactors is around 90 % - 98 %. Developed countries use nuclear energy widespread but underdeveloped countries still producing energy from chemical thermal energy or hydro power. The block which has most widespread use of nuclear energy is EU. Among the countries US is the leading country in nuclear energy use. EU and US are giving a high level of importance to nuclear energy. For instance, Belgium which can be counted as a small country by its territory size has 7 nuclear centrals. Europe does not have the raw material resources needed for producing nuclear energy; Europe takes needed raw material from Africa. The raw nuclear material is mainly uranium. In spite of its resources Africa does not have any nuclear power plants except two nuclear Load factor in South Africa. There are great discrepencies in distribution of energy worldwide. There are 1.5 billion people who have not interacted with electrical energy and there are 750 million people who have

not even seen the electrical light. This is a big inequality on sharing the energy among humanity. Nuclear energy production does not have that much danger which environmental associations mentioned. Nuclear power plants are constructions of high level technology and there are no safety problems about any issue. Arguments which defend that nuclear power plants are deadly dangerous are a piece of slanders. The worst disaster caused by nuclear energy was the Chernobyl Disaster which was happened in 1986. Nearly 30-40 people died by immediate effects, and some more thereafter. This death count is very near to a dead count which will be caused from a plane crush. Radioactive nuclear waste material produced by worldâ&#x20AC;&#x2122;s nuclear reactors is 500 cubic meters/year; amount of industrial hazardous materials which consist of extremely highly toxic, carcinogenic materials are 10 million cubic meters measured in a year. Other industrial waste is measured as 1 billion cubic meter per year. Danger caused by

highly toxic industrial waste is not less than the danger may be caused from radioactive nuclear waste. Nuclear radiation exists since the universeâ&#x20AC;&#x2122;s existence; it comes from sun, space, human, from stones, etc. There are radioactive materials everywhere so everybody is exposed to radiation at any place or situation. Intensity of radiation is the determining factor for the danger rate of nuclear energy. Discussions on the danger of nuclear energy production are not scientific based discussions. Ideological aspects are coming forward while discussing this issue. There is a tendency towards anti-nuclear idea within some marginal groups in Turkey. These people, who are against nuclear energy, have not much information on nuclear energy so they can be called as half enlight-

EurasiaCritic April 2010 15

Nuclear Turkey ened people. Anti-nuclear movements have no rational base actually. Even Patrick Moore (http://www.greenspirit. com/index.cfm) who is the founder of “Greenpeace” (an environmentalist association), admitted that nuclear energy is a need for future demand in his article published in The Washington Post in 2006. Moore also adds that environmentalist movements are opposing to all high technology and heavy machines and this leads world to a blind alley. In his Nuclear Statement to the US Congressional Committee http://www.greenspirit.com/logbook. cfm?msid=70, he states wordly “I want

16 EurasiaCritic April 2010

to conclude by emphasizing that nuclear energy – combined with the use of other alternative energy sources like wind, geothermal and hydro – remains the only practical, safe and environmentally-friendly means of resolving America’s energy crisis. If America is to meet its ever increasing demands for energy, then the American nuclear industry must be revitalized and allowed to grow. The time for common sense and scientifically-sound leadership on the nuclear energy issue is now.” The main aim of international treaties which were on nuclear energy is to develop nuclear energy for commercial

uses. Treaties were functioned well in 60s and they prevented a potential nuclear weapon production spread over the world. Also they contain articles on helping no-nuclear countries to develop their nuclear energy. But developed countries generally offer alternative energy sources to underdeveloped countries. This behavior is honest. Countries which do not have nuclear energy such Turkey signed the Nuclear Non-Proliferation Treaty (NPT), although Turkey did not need to sign this kind of a treaty because Turkey has no nuclear energy production so it is a mistaken and meaningless policy for Turkey, before the start of the construction of a nuclear reactor. International treaties about nuclear energy are adequate for today but there is a problem in their functioning. Countries which have nuclear weapons have an intention to not signing these treaties such Israel. These treaties are expected to control the Proliferation of nuclear weapons but they are not effective on the countries which have nuclear weapons. As stated before, most developed countries on producing and using nuclear energy are within the EU. US is the another country which has a high level of nuclear energy technology. Nuclear energy is an important gift given by God to people, every people on the world should benefit from nuclear energy. There are countries which have broken this nuclear energy monopoly. Those countries such as Japan and South Korea achieved their success by applying methodical state policies. The safest and most developed nuclear reactors are designed and constructed by Japan. Canada and South Korea can be counted also as other most successful countries about designing and constructing very safe nuclear reactors. Turkey has been signing protocols to construct a nuclear power plant for 40 years. The first agreement on constructing a nuclear power plant in Akkuyu Turkey was signed in 1960s with Sweden. All issues negotiated and finalized between Turkey and Sweden. There was a road problem to Akkuyu that roads were not sufficient to carry heavy

Nuclear Turkey

Countries which do

ar energy by its own. . loads and Turkey was not have nuclear Shah Regime was expected to solve this energy such Turkey giving a particular improblem because this signed the Nuclear portance on nuclear issue was not included Non-Proliferation energy production in in the nuclear reacTreaty (NPT), Iran. Shah regime was tor construction packoverthrown by Khoage proposal given by although Turkey meini while France Sweden. Turkey simply did not need to sign – Germany Partnerdid nothing to solve this kind of a treaty ship was constructing this problem. Agreebecause Turkey has two nuclear reactors ment between Turkey no nuclear energy in Iran. 60% of the and Sweden is then production so it construction was fincancelled by Sweden. ished at the time when Protocols on construcis a mistaken and Khomeini became tion of nuclear centrals meaningless policy for the leader of Iran. in Turkey were signed Turkey, before the start with various countries Khomeini governof the construction of like Canada, France, ment stopped nuclear a nuclear reactor. Germany, US but power plant construcnone of them finalized tion because of their in the near past. There are no expecta- anti-western ideas. In 90s, Iran signed i id tions of a nuclear energy development a treaty with Russia for finishing up in Middle East until the year 2050. Iran the constructions of these reactors. In and United Arab Emirates are excep- a speech of Iran Energy Minister which tional. UAE came to an agreement on was made in 2009 stated that “Russia building a nuclear power plant with did not finish the nuclear centrals for South Korea. Iran is studying on nucle- 20 years and Russia is not likely to fin-

ish them in the next 200 years.” Iran decided to develop nuclear fuel needs by its own after Russia’s unwillingness to complete the Iranian nuclear reactors. Iran started the uranium enrichment program at last. Iran’s studies on nuclear energy aim at commercial use of nuclear energy, so far. This uranium enrichment only provides the needed fuel for the nuclear reactors which were not finished yet. There are chances for countries which do not have nuclear energy production yet actually if they choose and come to an agreement with a qualified country or partnership for building nuclear power plants on their territory. Qualifications of the countries which are capable of building nuclear centrals are important at this point. For instance, Russia has an unsuccessful past on building nuclear power plants with the Iran case. Japan Hitachi Company can be called as the most successful company on building nuclear power plants. Hitachi Company is able to finish a nuclear power plant in 39 months EurasiaCritic April 2010 17

Nuclear Turkey

if agreement is signed, this speed can Turkey have plans for building nuclear be called as a record in nuclear power power plants, they have to have correct plant building. Canada finishes building knowledge about nuclear power plants up a nuclear power plant in 60 months, and they are obliged to design a wellUS lost its capability of building nuclear planned program for nuclear energy future. Qualifications of reactors within the last companies and coun30 years so US orders Iran’s studies on tries should be examnuclear reactor comnuclear energy aim ined well and deciponents from South at commercial use sions should be taken Korea. On the other carefully with a stable hand France – Germaof nuclear energy, government policy. A ny partnership builds so far. This uranium nuclear power plant nuclear power plants enrichment only produces electricity in 5 or 6 six years in provides the needed for a century; it is a their own countries but fuel for the nuclear long term and productheir past about buildreactors which were tive investment. ing centrals abroad is If Turkey had unsuccessful. Buildnot finished yet. started a nuclear ening of a nuclear power ergy program 40 or 50 plant to Brazil took 24 years and 6 months for France – Ger- years ago, today per capita of Turkey many Partnership. This partnership has would be around 30000 – 40000 dollars. not finished building of another reac- Also EU would open its gates to Turtor in Finland which was started ~ 15 key, if Turkey becomes a country which years ago. If Turkey or countries like has high level of technology. If Turkey 18 EurasiaCritic April 2010

prepares and applies a nuclear energy program efficiently for forthcoming 5 years, Turkey’s membership of the EU will be approved before the year 2015. Nuclear energy usage is a determining factor for a country’s respect in international area. Turkey will not face with problems such as Armenian Genocide arrogations if Turkey focuses on high level technology and succeeds. Foreign approach on Turkish technology development should be interpreted carefully. Western countries have a subtile tendency to undermine some technological developments because they will benefit from an increased dependency of Turkey. It should not be forgotten that Turkey had stopped developing airplane industry because the US offered airplanes practically free of charge in 50’s. If a country wants to achieve a high level of technology and development, the one and only guide is science leading to industrial production.

Nuclear Turkey

EurasiaCritic April 2010 19

Iraqi Energy Future

Source of Conf lict and Life: Energy Future of Iraq By Volkan Guner

lanning and managing an en- revenues represented over 75 percent ergy future is a hard quest for of GDP and 86 percent of government a country like Iraq. Iraq is in a revenues in 20081. conflict zone which maintains various Sanctions undermined Iraq’s oil secreligious and ethnic groups. Conflict in tor and Iraq’s oil infrastructure needs the country is based on political, ethnic to be reformed. US allocation of $ and economic problems. Especially af- 2.05 billion to Iraqi oil and gas sector ter the US invasion started a kind of reformain 2002, Iraq energy tion but it was ended in The attacks and deaths resources became 2008. In 2009, Iraqi budon the Election Day a bigger question get accepted $ 3.2 billion can be understood as for the sides of this allocation to Ministry of conflict. Iraq is exOil it was a %50 percent signals of an upcoming pected to have staincrease from the 2008 civil war in Iraq. bility after the elecbase budget. US governtions held in March ment agencies reported 7th, 2010. There are also some analysts that Iraqi reconstruction of oil, gas and who state that after the elections and electricity sectors cost $ 100 billion or US army withdrawn from Iraq there will higher. International oil companies are be a state of conflict. The attacks and expected to be aided according to the deaths on the Election Day can be understood as signals of an upcoming civil war in Iraq. All these issues will strongly affect the energy future of country. For understanding and interpreting the situation of energy, Iraq’s energy evolution should be examined, especially situation on oil and natural gas. Iraq was the world’s 13th largest oil producer in 2008, and has the world’s third largest proven petroleum reserves after Saudi Arabia and Canada. Just a fraction of Iraq’s known fields are in development, and Iraq may be one of the few places left where vast reserves, proven and unknown, have barely been exploited. Iraq’s energy sector is heavily based upon oil, with approximately 94 percent of its energy needs met with petroleum. According to the International Monetary Fund, crude oil export

20 EurasiaCritic April 2010

Hydrocarbons Law in accordance with their investments.

Oil Oil and Gas Journal announced that Iraq has oil reserves which contain 115 billion barrels but statistics have not been revised since 2001. In the unexplored territories of Iraq (western and Southern Deserts) there may be additional coverable oil of 45 to 100 billion barrels. One of the main problems on oil is the division of resources across sectarian demographic lines. Hydrocarbon resources are mostly found in the Shiite areas of the South and resources of Northern Iraq which is ethnically Kurdish is controlled by Sunni minority. Eastern edge of Iraq is known as the oil and gas depot of the country. There are 9 fields which are called as “Super Giants” (over 5 billion barrels) and there are 22 fields which are known as “Giant” fields (over 1 billion barrels). Southeastern Iraq contains the largest known concentration of such fields. This region also has the 70 to 80 percent of the Iraq’s proven oil sources. 20 percent of oil resources are located in the north of Iraq, near Kirkuk, Mosul, and Khanaqin. This area is controlled by the Kurds and other groups living

Iraqi Energy Future in that region.

Oil Production State owned oil companies were producing oil at an average of 2.4 million barrels per day. In 2008, production was 2.1 million barrels per day in 2007. Pre-war production capacity level still not reached which was 2.8 million barrels per day in 2003. Nearly 66% of the production comes from the southern fields. Actually, three giant fields are the major production areas: North and South Rumelia and Kirkuk. Currently, the Ministry of Oil has central One of the main control over oil and problems on oil gas production and is the division of development in all resources across but the Kurdish terrisectarian demographic tory through its three operating entities, the lines. Hydrocarbon North Oil Company resources are mostly (NOC), the South Oil found in the Shiite Company (SOC), and areas of the South the Missan Oil Comand resources of pany (MOC), which Northern Iraq which was split off from the South Oil Company in is ethnically Kurdish 2008. According to the is controlled by Sunni NOC’s website, their minority. concession and jurisdiction extends from the Turkish borders in the north to 32.5 degrees latitude (about 100 miles south of Baghdad), and from Iranian borders in the east to Syrian and Jordanian borders in the west. The company’s geographical operation area spans the following governorates: Tamim (Kirkuk), Nineveh, Irbil, Baghdad, Diyala and part of Babil to Hilla and Wasit to Kut. The remainder falls under the jurisdiction of the SOC and MOC, and though smaller in geographical size, includes the majority of proven reserves. MOC’s oil fields hold an estimated 30 billion barrels of reserves. They include Amara, Halfaya, Huwaiza, Noor, Rifaee, Di- 2010. Crude oil production capacity is jaila, Kumait and East Rafidain. expected to become 1.5 million barrels

Development

Iraq government aims to increase oil production by 300.000 barrels per day 70 2.7 million barrels by the end of

per day within 3-4 years and by an additional 2 million barrels per day to a total of 6 million barrels per day within 10 years according to the Iraq’s 10 year

strategic plan (2008-2017). As part of this plan, Iraq planned three licensing rounds. The first was announced June 30, 2008, and included plans to rehabilitate six giant producing fields with reserves of over 43 billion barrels. These EurasiaCritic April 2010 21

Iraqi Energy Future contracts were planned to be awarded the central government with internaby mid-2009. The second bidding round tional companies during Saddam Huswas announced in December 2008 for sein’s regime are being renegotiated fields that were explored but not fully or may come under review when Iraq’s developed. Iraq also plans to sign delin- oil law and investment framework is in eation agreements on shared oil fields place. In the interim, the Iraqi Ministry with Kuwait and Iran. It would like to of Oil has approved a request from the set up joint committees with its neigh- KRG to send 60,000 barrels per day bors on how to share the oil. In April of crude oil from the Tawke and Taq 2009, Iraq started work fields in the Kurdish on the Safwan field region to the northern Iraq government made with Kuwait. Iraq export pipeline, agreements with 45 effective June 2009. Kurdistan companies from 23 KRG Natural ReRegional countries in December sources Minister Ashti Government 2009 which is on Hawrami expects Issues oil reserves worth $ Kurdish production to reach 250,000 barrels 41.2 billion. Russian The Kurdistan Reper day by early 2010. gional Government giant oil production (KRG), the official rulcompany LUKoil Refining ing body of a federated which was withdrawn Iraqi refineries, region in northern Iraq from Iraq after the with a total capacity that is predominantly Iraq War in 2002, of almost 600,000 barKurdish, passed its rels per day, have antihas been returned to own hydrocarbons law quated infrastructure, in 2007. Despite the west Kurna-2 region and their output does lack of a national Iraqi with the cooperation not reflect the current law governing investof Norwegian Statoil demand mix. Despite ment in hydrocarbons, (ASA) Company. improvements in reKRG has signed oil cent years, the sector production sharing, has not been able to meet domestic development and exploration ti contracts t t with several foreign firms. In addition, demand for most refined products, and more than a dozen contracts signed by the refineries produce too much heavy

22 EurasiaCritic April 2010

fuel oil. As a result, Iraq relies on imports for about one fourth of the petroleum products it uses, with total petroleum product consumption averaging about 600,000 barrels per day in 2008. To alleviate product shortages, Iraq’s 10-year strategic plan for 2008-2017 set a goal of increasing refining capacity from 600,000 barrels per day to 1.5 million barrels per day. Iraq has plans for 5 new refineries, as well as plans for expanding the existing Daura and Basrah refineries.

Natural Gas Reserves According to the Oil and Gas Journal,Iraq’s proven natural gas reserves are 112 trillion cubic feet (Tcf). An estimated 70 percent of these lie in Basra governorate in the south of Iraq. Probable Iraqi reserves have been estimated at 275-300 Tcf, and work is currently underway by several IOCs and independents to accurately update hydrocarbon reserve numbers. Iraq’s proven gas reserves are the tenth largest in the world, and two-thirds of resources are associated with oil fields including, Kirkuk, as well as the southern Nahr (Bin) Umar, Majnoon, Halfaya, Nassiriya, the Rumaila fields, West Qurna, and Zubair. Just under 20 percent of known gas reserves are non-associated; around 10 percent is salt “dome” gas. The majority of non-associated reserves are concentrated in several fields in the North including: Ajil, Bai Hassan, Jambur, Chemchemal, Kor Mor, Khashem

Iraqi Energy Future al-Ahmar, and al-Mansuriyah.

Production Iraqi natural gas production has risen since 2003, and has returned to levels reached during the mid-1990â&#x20AC;&#x2122;s. However, its 2006 dry natural gas production of approximately 104 billion cubic feet (Bcf) per year is still far below its peak level of 215 Bcf reached in 1989. The Ministry of Oil reported that approximately 60 percent of associated natural gas production is flared due to a lack of sufficient infrastructure to utilize it for consumption and export. Significant volumes of gas are also re-injectedto enhance oil recovery efforts. In addition, the flaring of the natural gas has meant lost Liquefied Petroleum Gas (LPG) output of an estimated 4,000 tons per day, while at the same time there are LPG shortages requiring imports of 1,200 tons per day. To reduce flaring, the state-owned South Gas Company signed an agreement with US is planning to Shell in Sepwithdraw from Iraq tember 2008to until 2011, after US implement a withdrawn, Iraq is 25-year project to capture expected have more flared gas and problems about provide it for internal security. domestic use, with any surplus sent to an LNG project j ffor export.

Upstream Development The non-associated gas fields reportedly slated for priority development are mostly in the northern governorates near Kirkuk, including: al-Mansuriyah and the nearby Khashem al-Ahmar and Jaria Pika, Kor Mor, Akkas, Chemchemal and Siba. It is also been reported that the government of Iraq plans to capture more associated gas at Rumaila and Az-Zubair within five to ten years. Iraqâ&#x20AC;&#x2122;s 10-year strategic plan for 2008-2017 set a goal of increasing natural gas production to 2.5 trillion cubic feet per year, and to end the flaring of natural gas. As part of this plan, Iraq planned three licensing rounds. The first was announced June 30, 2008, and

included an expected $5 billion investment for natural gas fields with 22 Tcf of reserves, including Akkas in the western desert and al-Mansuriyah in the east. The contracts to develop these fields are planned for mid-2009. The second bidding round with 26 Tcf of reserves was planned for 2009, and includes the Siba field in the Basra area.

Iraq signed an agreement on producing oil in Bedra Region with a consortium which is a partnership of Russian Gasprom Neft Turkish TPAO, South Korean Kogas and Malaysian Petronas. Iraqi State owned oil companies have a share of %25 in this consortium. This consortium won a bid which was held in December 2009. This agreement will EurasiaCritic April 2010 23

Iraqi Energy Future

last for 20 years of time which is made for oil production of oil. Production is 170.000 barrels per day in Bedra region. Iraq government made agreements with 45 companies from 23 countries in December 2009 which is on oil reserves worth $ 41.2 billion. Russian giant oil production company LUKoil which was withdrawn from Iraq after the Iraq War in 2002, has been returned to west Kurna-2 region with the cooperation 24 EurasiaCritic April 2010

of Norwegian Statoil (ASA) Company. Russia had cancelled the payment of Iraq’s dept of $ 10 billion. It is clear that Iraq is getting more and more privatized on producing and selling energy. International status and US effect on energy obliges Iraq to that kind of a policy. Iraq’s energy policy cannot be designed by Iraq’s own. Not only international pressure but home affairs of Iraq are so much complicat-

ed. Election cannot solve those internal problems in a short – time period. Energy games on Iraq will expected to continue after the election but actors and roles are a bit changing. Iran was the most benefited country from the US invasion of Iraq in 2002. Actually, Iran got stronger and stronger after the invasion. Iran started the uranium enrichment program which seen as a possible threat especially by US. Iraq is so much problematic because of the conflicts and stability problem in its territory. So Iraq becomes more vulnerable to outside pressures. Iraq does not have the enough power to solve its problems by its own. Iraq needs to arrange new laws for preventing conflicts and to construct a political stability. Iran’s pressure on Iraq is based on forming a Anti-American government in Iraq. Iran is investing on Iraq’s energy sources and making donations to religious associations to increase their

Iraqi Energy Future

effect on Iraq. US is planning to withdraw from Iraq until 2011, after US withdrawn, Iraq is expected have more problems about internal security. So Iraq will expect aid from its neighbors, Iran is preparing for Consolidative laws for this kind of an invitaethnic and religious tion and Iran would groups and powerful definitely use Iraq’s support for efficiency unstable situation to use Iraq’s energy of these laws may be resources and Iran effective for assuring would intervene Iraq stability. policies. Russia is an another matter of i R i will ill fact on energy in the region. Russia try to dominate natural gas production and exportation with using the advantage of its stability. Iraq should find a solution to prevent a possible state of conflict solution may include delaying US withdrawn too. Consolidative laws for ethnic and religious groups and powerful support for efficiency of these laws may be effective for assuring stability. If stability cannot be assured energy exploitation over Iraq will become more widespread on oil and natural gas resources. It should be stated that Iraq is privatiz- ing to the unofficial results al- Iraqqiya ing its energy production infrastructure coalition which is leaded by former with the agreements which are signed prime minister Iyad Allawi is going with foreign companies. This is a re- ahead with a minor difference, Nasult of globalized world economy but tional Iraqi Alliance and State of Law Iraq’s policy seems to be a result of the Coalition will be the second and third conflicts within the region. Iraq cannot parties. Election results are hard to be administrate its energy resources but predicted but a coalition government privatize them. It seems to be hard to will be inevitable in Iraq. If Iraq canform a new government in Iraq, accord- not form a strong government after the

elections then Iraq would lose its sovereignty on its energy resources so Iraq’s sovereignty in its borders will become suspicious.

Statistics and Charts are taken from Energy Information Administration http://www.eia.doe.gov/emeu/cabs/Iraq/Full. html EurasiaCritic April 2010 25

S.Eastern Asia

New Energy Bridge: Pakistan By Ali Kulebi

/3 of world population lives in Asia. World’s important natural resources are in this continent and 30% of the world trade is within the Asia as well. Japan is one of the five biggest economies in the world so it is expected that there will be three Asian countries in the five biggest economies of the world in the near future. Asia continent will be a matter of fact on shaping world economy and politics in the future. There is also an important country in Asia which do not become a giant

26 EurasiaCritic April 2010

ART International Politics Director power but affective on world politics. its strategic location with this condition Regional power Pakistan is a very im- too. Pakistan is only Muslim nuclear portant country with its high popula- power in the world in respect with its tion, its strategic location which con- memberships to international organizanects Central Asia to open seas, South- tions and its military power. ern and Western Asia. Pakistan which Besides all those important issues, Pakistan has a strais observer member Japan is one of the tegically important of Shanghai Cooperation Organization, role for the countries five biggest economies China, Japan and Inalso connects Shangin the world so it is dia which are called as hai Cooperation Orexpected that there Asian Tigers, with its ganization’s member will be three Asian potential place in the countries to Arab Sea countries in the five so Pakistan cements energy transportation biggest economies of and supply network of those countries. It the world in the near would be a approprifuture. Asia continent ate approach to say will be a matter of that India which is in fact on shaping world a serious conflict with economy and politics Pakistan for years, in the future. cannot solve its energy problems without havcooperation with Pakistan. ing a cooperati Its clear that Pakistan has some major problems in contrast with its rising strategic importance on energy transportation routes and transportation of fossil fuels to Arab Sea. Pakistan’s some major problems are spreading radical religious terror which is spreading inside the country, ethnic terror in Belucistan which has foreign origins, Pakistan had constructed and developed nuclear power as a result of Keşmir problem with India which cannot be solved since 1947. This nuclear power increased the US pressure on Pakistan.

S.Eastern Asia

In spite of its nuclear technology power plants which have 1000 Megaand three nuclear power plants, Paki- watts capacity. As a result of those studstan will need more energy with it high- ies, Pakistanâ&#x20AC;&#x2122;s electricity production ly increasing population. This friendly from nuclear power plants will increase from 500 megawatts country seems to be a to 8000 megawatts in energy corridor in the It would be a 2020s. Briefly, Pakifuture but Pakistan will appropriate approach stan will produce 16 have a huge electricity to say that India which times more electricneed in the future. ity by nuclear power Having nuclear is in a serious conflict plants ten years later. technology gives the with Pakistan for advantage of producing This precisely means years, cannot solve an important producits own need for Pakiits energy problems tion and having liberstan, if only Pakistan without having a ation against foreign makes the appropriate cooperation with dependence for an investments and develundeveloped country opments. For having Pakistan. like Pakistan which this advantage Pakistan has not fossil fuel reneeds to build nuclear power plants which have higher capac- sources. Pakistan which can deal with its enity. Nuclear power plants of today usually have a capacity of 1200 Megawatts, ergy hunger with the nuclear energy each nuclear power plant unit of Paki- production, has also so much advantagstan has a capacity of 300 megawatts. es deriving from its important geopolitiThis capacity seems to be enough for cal location on fossil fuels. Pakistan is in todayâ&#x20AC;&#x2122;s Pakistan but Pakistan will need the middle of the Central Asian Counmore energy in the near future. Thus tries which has rich oil and gas resourcPakistan is planning to have nuclear es. Turkistan countries in Central Asia

have oil reserve of 24 billion tons and have natural gas reserve of 3300 billion cubic meters. These Turkistan countries can reach open seas and world markets limitedly, Pakistan is also a path for this countries with Turkey. On the other hand, not only Central Asia, Middle East which has 58% of the world oil reserves and has 25% EurasiaCritic April 2010 27

S.Eastern Asia produced by China in Sudan against the threat of African Pirates.

Efforts of Pakistan for being an Energy Corridor

of the world natural gas resources, also dependant on Pakistan’s geopolitical location. As a result, Pakistan can serve for three main energy corridors, Pakistan

This harbor in the west of Karaci and has a distance of 400 km, its distance to Iran Border is 60 km and its distance to Hurmuz Strait is 350 km. Gwadar Harbor has a perfect strategic location for assigned transportation and $10 billion to finish A north-south storage of petroleum. this project which is oil corridor which will This harbor is also seriously supported connect Middle East ideal for petroleum by US and told to be and Central Asia to transportation begiven to a US company China. tween Turkistan counA east-west tries and China. China for construction. Just corridor which will contributed the conlike in similar cases, connect India to Midstruction of Gwadar Russia Federation’s dle East Harbor with an aid of detention and A north south $198 million in 2006. sabotaging actions oil and natural gas corChinese officials also against this project is ridor which will constated that they will nect India to Turkistan contribute to the conalso recognized countries is a future struction of Gwadar plan with building a Harbor with serious pipeline link inside Pakistan. investments in the future. China energy demand increased Importance of Fossil Fuels on from 8.5 million barrels per day to 9.1 China – Pakistan Relations million barrels per day which means When the issue of connecting Mid- an increase of 3.5 % in 2009. China dle East and Central Asia with an oil can supply a part of its energy demand corridor comes into the account, Gwa- through Pakistan and Gwadar. Gwadar Harbor is also safe for dar Harbor which is located in southwest of Pakistan, gains importance. transporting the petroleum which is 28 EurasiaCritic April 2010

Pakistan which tries to handle both its own fossil fuel need and Southern and Southeast Asia countries fossil fuel need, was first started working on the Iran-Pakistan-India (IPI) natural gas pipeline with Iran in the beginning of 1990s. Russia Federation supported this project for Iran to sell natural gas to east instead of Europe because of Russia’s desire to establish a natural gas monopoly over Europe. India first leaned towards this pipeline project which was supposed to be an 2.775 km long energy link passing through Karaci and connects Iran’s Pars Region to India. India stated withdrawn signals with using the natural gas prices as an excuse for not to lose nuclear technology opportunity which was offered by US. Pakistan’s strategic ally China has a high energy demand and started working on finding solutions to maintain the project without India. Another project on energy is which sustains on a less problematic survey than IPI is aiming at carrying Turkmenistan natural gas to Pakistan through Afghanistan since 2002. Because US aims to harm Iran on IPI project but supports Pakistan and India for transportation of Turkmen natural gas. Only problem in the project is the confusion in Afghanistan and lacking transportation security. Afghanistan’s economical benefit from this project named as Turkmenistan-Afghanistan-PakistanIndia pipeline is obvious. Pakistan assigned $10 billion to finish this project which is seriously supported by US and told to be given to a US company for construction. Just like in similar cases, Russia Federation’s detention and sabotaging actions against this project is also recognized. Another project which can pass through Pakistan is Gulf CountriesSouth Asia (GUSA) pipeline. This project is in the agenda since the beginning of 1990s. Goal of the project is to carry Qatar natural gas beyond the Gulf,

S.Eastern Asia

Gwadar Harbor through United Arab Emirates territory and territorial waters. China and India requested to join this project while the process. If this project successes, Pakistan is expected to use 25% of the gas which reached to its territory and sends the rest to Asian countries. This project’s progress is problematic because of finance, lacking of mutual trust and terror threat.

Political Struggles with India delay the Pakistan to become an Energy Corridor Its clear that Cold War between US and Russia in transformed to a economical survey more than a political survey. Russia Federation which aims to maintain its energy monopoly over Europe, also wants to maintain its transportation country and control monopoly over the fossil fuels of Turkistan countries. Besides Russia’s concern on NABUCCO project, US’s reservations towards Iranian natural gas transportation to Europe and India shows the

political dimensions of the game which is played on the energy chess board in Asia Minor. Pakistan which has kind relations with US just like its neighbors, is taking the cuts derived from these games as much as possible. Problems about Iran-PakistanIndia(IPI) pipeline project are getting more dimensional because of the political reasons, especially reasons derived from the problem with India caused by Keşmir problem. According to the agreement signed for this project in 1993 between Iran and India, 700 km of the pipeline will pass through Pakistan and will reach India. Project costs $4 billion and it was expected to be so much beneficial for Pakistan. If this project succeeded then Pakistan paid $500 million per year as a transportation payment and also Pakistan will be able to pull an amount of natural gas for itself to diversify its energy provision. Keşmir problem between these

states leading India to withdraw from the project and India is more closer to an idea to construct an undersea pipeline to exclude Pakistan from the issue. In spite of Pakistani guarantee which states pipeline will work in war time, India’s concerns are still important but another important issue is Russia and US support and shackles onto this kind of projects. In this sense, it was stated that Pakistan will get help for having energy from the new dams of the Tajikistan through Wakhan energy corridor, only if US abandons Iran natural. Pakistan’s position is not certain at this point. While the games on energy proceeds like this, countries which have energy resources or countries which will make use of this energy, harmed from this situation. Colonial countries’ plans for collapsing and sharing Ottoman Empire are applied upon the countries which have energy resources or countries on energy bridges, in different dimensions. EurasiaCritic April 2010 29

Special Report

Turkish Energy Industry Report Executive Summary

he Turkish energy sector is widely seen as the most promising and attractive investment area in the Turkish economy. The market is experiencing a transition towards a competitive market structure in order to attract private sector investment. The energy market is witnessing rapid growth and a liberalization process with the recent privatizations, licence tenders and strategic partnerships. The sector has been remarkably active recently and offers major opportunities to investors. Turkish energy consumption is low compared to Western European countries. However, the large, young and increasingly urban population in Turkey represents a growth potential. Currently, Turkey is a major energy importer, as its energy consumption

30 EurasiaCritic April 2010

growth has outpaced domestic produc- decrease; however a recovery of 2.5% tion. Substantial investment in the en- annually is expected between 2010 and ergy sector will be required in the near 2013 . The Turkish electricity market was one of the fastest future in order to meet growing in the world. the increasing demand The Turkish electricity Installed capacity has in Turkey. The energy market was one of continued to rise regconsumption in Turkey the fastest growing in ularly in the last dereached a level of 102 cade from 23,354 MW tonnes of oil equivathe world. Installed to 41,817 MW with a lent, or 1,415 kg of oil capacity has continued CAGR of 7.8%. As a equivalent per head to rise regularly in result of the increase in 2008 (which is still the last decade from in the share of natural below Western lev23,354 MW to 41,817 gas fired power plants, els) with an increasing MW with a CAGR of natural gas constitutes trend between 2004 and the highest share of 7.8%. primary energy re2008. Given the sources with 39% of slowdown in the economy since mid-2008, energy consump- the total followed by lignite (30%), tion growth slowed from 5.3% y-o-y in hard coal (7%) and fuel oil (6%) in 2007 to 1.4% in 2008. The decline is ex- 2008. Turkeyâ&#x20AC;&#x2122;s domestic oil and gas propected to continue in 2009 with a 5.5% duction meets less than 3% of its energy

Special Report requirement leaving Turkey a major importer of oil and gas. 90% of Turkey’s crude oil is imported, mainly from Saudi Arabia, Iran, Iraq and Russia. 70% of domestically produced oil is obtained from the state-run Turkish Petroleum Corporation (TPAO) with the remainder produced mainly by Royal Dutch/Shell. As for natural gas, Turkey is dependent on imports from Russia which corresponded to 63% of the total in 2007. Other suppliers include Iran which accounted for 17% and Azerbaijan for 4% of the total. A competitive gas market in Turkey is shaped by the Natural Gas Market Law which was issued in 2001. Accordingly a gas release program was initiated and the transfer of the rights under 4.75 bcm of BOTAŞ’s contracts (14% of actual gas imports) was completed. These rights were acquired by four private sector companies which won the public tender and which have now started gas imports. The State-owned pipeline operator and gas supplier BOTAŞ previously handled all oil and gas import and owns the distribution infrastructure, though its dominant share of the market is planned to be further reduced in coming years in line with the Natural Gas Market law. The share of the private sector in gas import and wholesale activities should thus rise as the share of the State (BOTAŞ) falls. Coal is mainly used for power generation in Turkey. 30% of total primary energy consumption in Turkey is derived from coal. Only one-half of the coal used is produced domestically in Turkey which makes Turkey’s coal market dependent on imports. The coal market is considered as largely a monopoly operated by the Turkish Hard Coal Enterprises (TTK) although minor parts of production, processing and distribution activities are contracted to the private sector. On-going transformation and liberalization of the energy markets has led to increased private investment, from both domestic and foreign investors. There are a great deal of investment opportunities in the Turkish energy sector. State-owned generation and distribution assets are to be privatised,

new power plants are to be built by the private sector, tenders for licences in natural gas distribution are held and certain natural gas import agreements of the state are (as described above) transferred to the private sector. In the past five years, Turkey has accommodated a lively investment environment as many foreign investors have made greenfield investments, entered into partnerships with local players and acquired state-owned and private companies. Turkey has also a significant potential for renewable energy. Due to substantial renewable energy resources and recent developments in renewables legislation and liberalization in the electricity market, there is a suitable environment for renewable investments. The renewable energy sector is further analyzed in ISPAT’s “Environmental Technologies & Renewable Energy Industry Report”.

Energy exporting regions such as the Middle East and Africa have also experienced growth in energy consumption . However, energy consumption is expected to experience a decrease in 2009 due to the global economic crisis. The fall in the consumption is expected to affect oil, natural gas and coal consumption. Oil has the highest share within the global energy consumption corresponding to 35% of the total followed by coal, natural gas and hydroelectricity .

Oil

Sector Overview

Strong growth in demand together with the reduction in spare capacity between 2003 and 2007 has led to rapid growth in oil prices, which culminated in a peak of over US$140/barrel in July 2008 . The peak was followed by even more rapid decline as the impending global recession took shape. From early 2009 onwards, however, oil prices have resumed their upward trend.

Global Sector

Natural Gas

Global energy consumption reached a level of 10,465 million tonnes oil equivalent in 2008 with a CAGR of 2.4% between 2004 and 2008. Coal consumption has shown the highest growth in 2008 with a growth rate of 3.7%.

In 2008, the demand for natural gas has started to decline with countries hit by recession reducing their energy usage. This trend continued in 2009. Although the consumption of natural gas was declining, at the same time new gas EurasiaCritic April 2010 31

Special Report nomic downturn experienced in Turkey in 2001 but picked up in 2002 and continued to grow thereafter, reaching the pre-crisis consumption level in 2003. The energy consumption increase continued between 2004 and 2008 equalling 102 tonnes of oil equivalent, or 1,415 kg of oil equivalent per head, which is still below Western standards. Together with the global economic crisis, the energy consumption slowed down since mid-2008 with an annual growth rate of 1.4% in 2008, compared to a rate of 5.3% in 2007. The decline is expected to continue in 2009 with a fall of 5.5% however a recovery of 2.5% annually is expected thereafter between 2010 and 2013.

Electricity resources such as liquefied natural gas come attractive due to the demand of (LNG) from Middle East and Indo- many countries to diversify their energy nesia have emerged. sources and the high Despite the global ecolevel of alternative enIn the past five nomic downturn, total ergy costs. Russia and years, Turkey has natural gas production France are major playaccommodated a increased by 4.1% in ers in nuclear power in lively investment 2008, Russia and the Europe, where nucleenvironment as many US being the main ar energy comprises foreign investors producers. more than 44% of total electricity generahave made greenfield Coal tion. Concerns over investments, entered the global warming Coal production is into partnerships effect of carbon-based expected to increase with local players electricity generation, by nearly 60% between and acquired statetogether with con2009 and 2030 with owned and private cerns over the security most of the growth exof oil and gas supply, pected in China and companies. Turkey have reawakened inIndia . The Worldâ&#x20AC;&#x2122;s has also a significant terest in other counlargest coal consumer potential for tries such as the UK is China which is exrenewable energy. and Sweden. China is pected to dominate planning to construct 38% of world capacity by 2011. Another country in which capacity of more than 20,000 MW by coal is the primary source of energy is 2015 . India, where 62% of the countryâ&#x20AC;&#x2122;s elecThe Domestic Sector tricity generation is obtained from coalfired stations. The demand from these Sector Overview two big coal consumers has shaped the Figure 6 - Energy Consumption by growth in the coal market with an annual increase in global demand of 5% Country Turkey is one of the fastest growing from the beginning of the century . energy markets in the world, with signifNuclear icant further growth potential. Turkish The nuclear energy industry has be- energy demand was affected by an eco32 EurasiaCritic April 2010

The Turkish electricity market is currently going through a liberalization process and rapid growth. The market is experiencing a transition towards a competitive electricity market in order to attract private sector investment and maximise efficiency. Electricity demand in 2008 equalled 198 TWh, representing 4.3% annual growth from 2007. The CAGR of electricity demand between 2004 and 2008 was 7.2% . Electricity demand has been growing in parallel with the urbanization and industrialization level and economic development. Also supported by the population increase, the Turkish electricity demand shows great potential for further growth. Electricity demand is expected to be affected by the global economic downturn where there is a 4.7% decrease in the first ten months of 2009. However, there is a sign of recovery in demand in the following months and the demand turns to increase in October by 6.5% . Installed capacity has continued to rise gradually in the last decade between 1998 and 2008 from 23,354 MW to 41,817 MW respectively with a CAGR of 7.8%. In line with the increase in share of natural gas fired power plants, natural gas constitutes the highest share in primary energy resources with 39% followed by lignite (30%), hard coal (7%) and fuel oil (6%) in 2008 . The current energy supply including the ex-

Special Report isting power plants, the licensed plants and those under construction was expected to be insufficient to cover the Base Energy Demand starting from 2009 . On the other hand, the decline in economic activity which has affected electricity demand has also delayed the electricity imbalance. After a recovery in electricity demand, there will be the requirement for further capacity to balance supply and demand. The estimated investment required for the period of 2009-2017 is approximately US$ 3550 bn . The top 15 generators by installed capacity ranking as of December 2008 are shown in the following table. The state owned generation company EÜAŞ currently owns c.58% of total installed capacity. Due to the ongoing liberalization process in the Turkish electricity market the state owned generation assets are expected to be privatized Apart from state owned EÜAŞ, the other top players are: ENKA, a leading construction company in Turkey owning the Adapazari, Gebze and Izmir combined cycle gas turbine (CCGT) plants. Isken owns an imported coal power plant and Baymina is the fourth largest player with 798 MW CCGT. Birecik owns one of the largest HEPPs (Hydro Electric Power Plants). There are basically two types of prices in the Turkish electricity market defined as: market prices and regulated tariffs approved by EMRA. A comparison of the system imbalance prices (SIPs) and TETAS whole sale prices is presented in the below chart. System imbalances prices are set in the Balancing Market where upward and downward regulation offers to cover the long or short position of the market are accepted by the system operator, TEIAS. TEIAS accepts the offers in accordance with the daily demand forecast and daily generation schedule defined on an hourly basis. Prior to July 2008, the gap between regulated tariffs and market prices was high. The Automatic Pricing Mechanism, based on reflecting cost fluctuations onto the energy prices of state owned enterprises was introduced as of July 1, 2008 and had an

immediate impact on the TETAS price. The Automatic Pricing Mechanism affected the TETAS price and the gap started to close. The Turkish electricity markets regulatory structure is as follows: General principles are set by the Law. The Council of Ministers and/or the High Planning Council make decisions in line with the spirit of the law. Detailed rules are set by secondary regulations and finally detailed operational matters such as tarif approvals and the issuance of licences are defined by EMRA Board Decisions. The Electricity Market Regulatory Authority established as per Law no. 4628 was later renamed the Energy Market Regulatory Authority. EMRA acts as a supervisory and regulatory body for the energy market. These laws aim to establish a stable and transparent energy market functioning in a competitive environment. The market

chain can be divided into four sections; generation, wholesale, distribution and retail market (or consumers). There is a monopoly for transmission in between wholesale and generation. The general market value chain and structure is illustrated in the following figure.

Oil & Gas Turkey’s known oil and gas reserves correspond to 300mn bbl and 8.0bcm, respectively. Oil production is far lower than the estimated consumption of c.673,000 b/d in 2008. Oil comprised c.31.5% of total primary energy consumption in Turkey in 2008, showing a slight increase compared to 2007 (30.2%) whereas natural gas comprised 31.6% of the total in 2008, almost stable compared to 2007 (31.2%). Natural gas prices have risen in line with global prices . Demand for natural gas is increasing rapidly as it is preferred as the fuel

EurasiaCritic April 2010 33

Special Report Coal

for industrial use as well as for power generation. 55.5% of natural gas was used for power generation, 22.5% for residential use and the remaining 22% for industrial use in 2008. Although relatively low compared to others, industrial usage has nearly doubled since the beginning of the decade . The network of the State-owned pipeline operator and gas supplier Botaş covered 63 cities by the end of 2008, increased from 54 at the end of 2007. The improvement in the distribution network is expected to increase natural gas availability. Turkey’s domestic extraction of oil and gas meets less than 3% of its energy requirement leaving Turkey a major importer of oil and gas. 90% of Turkey’s crude oil is imported, mainly from Saudi Arabia, Iran, Iraq and Russia. 70% of domestically produced oil is obtained from the state-run Turkish Petroleum Corporation (TPAO) whereas the remainder is produced mainly by Royal Dutch/Shell. As for natural gas, Turkey is dependent on imports from Russia corresponding to 63% of the total in 2007. Other suppliers included Iran accounting for 17% and Azerbaijan for 4% of the total . Turkey has a strategic location between European markets and major oil and gas-producing countries in the Middle East and 34 EurasiaCritic April 2010

around the Caspian Sea. Although the Bosphorus is a major oil shipping route between the Black Sea and the Mediterranean, heavy oil tanker traffic through the Bosphorus is restricted due to environmental concerns. The legal framework for the EU-backed Nabucco pipeline project was signed by Turkey and four EU transit countries in mid-July 2009. Accordingly, the 3,300-km pipeline will carry gas from the Caspian region and the Middle East through Turkey, Bulgaria, Romania and Hungary to Austria, with the gas further distributed to other EU countries through existing pipelines. The project is expected to reduce the dependence of EU countries on Russian gas .

30% of total primary energy consumption in Turkey is derived from coal. Coal consumption of 92.8m tonnes in 2008 declined by c.2.3% compared to the prior year , whereas total coal production in 2008 amounted to 1586.2m tonnes, up from 76.6m tonnes in 2007 . Hard coal is mainly mined by TTK in Zonguldak in the western Black Sea region. Lignite is mined mostly by the state-owned Turkish Coal Works (TKI) in various parts of the country. TKI controls mining in Afsin-Elbistan located in South-East Anatolia, where most lignite coal is produced. Only one-half of the coal used is produced domestically in Turkey. This makes Turkey’s coal market dependent on imports. The domestic coal market is largely considered as a monopoly operated by Turkish Hard Coal Enterprises (TTK) with minor parts of production, processing and distribution activities contracted to the private sector.

Nuclear Turkey does not produce electricity from nuclear sources. A tender for building a 1,000-MW nuclear-power plant by 2005 was cancelled in 2000. In subsequent years, a tender was developed for the first nuclear plant with a combined capacity of 5 GW and was announced on September 24, 2008. However, with only one consortium submitting a bid, namely Russia’s state-owned nuclear export company Atomstroyexport and Turkey’s Park Teknik Group, the tender was cancelled by TETAŞ in

Special Report November 2009. As the energy demand grows in Turkey, nuclear energy could provide an important supply source and will remain on the agenda in the coming years.

Main Players Electricity Before the 1990s, a state owned company, the Turkish Electricity Authority (TEK), dominated the Turkish electricity industry. TEK was established in 1970 and in order to move towards market liberalisation and pri- tenders started to import gas and sell it vatisation it was separated in 1993 into wholesale to major customers in TurTEAS for generation, transmission and key. In the coming years, further tenwholesale power supply and TEDAS ders are expected which should reduce for distribution. In 2001, TEAS was BOTAS’s market share in imports to further separated into the limit of 20% set by EUAS for generation, the Natural Gas MarTurkey has a strategic TETAS for wholesale ket Law as the maxilocation between and TEIAS for transmum for any one marEuropean markets mission; each being ket player. The private and major oil and gasestablished as a sepasector’s market share producing countries rate legal entity with should thus increase the introduction of correspondingly. The in the Middle East the Electricity Market companies which sucand around the Law. EUAS operated cessfully tendered to Caspian Sea. Although 91% of Turkey’s power take over the agreethe Bosphorus is a supply before the elecments and their cormajor oil shipping tricity reform in 2001 . responding volumes route between the Most of EUAŞ’s power were Enerco 2.5 bcm, plants are to be privaBosphorus Gas 750 Black Sea and the tized according to the million Sm , Avrasya Mediterranean, privatization plan. Gas 500 million Sm heavy oil tanker and Shell 250 million Oil & gas traffic through the 3Sm . Bosphorus and Bosphorus is restricted Shell have completed BOTAS, the statedue to environmental the take-over process owned gas supplier earlier and have startand pipeline operator, concerns. ed importing in 2008, handled all gas and oil whereas Enerco and import and distribuAvrasya Gas started their operations tion infrastructure until recently. Howin April 2009. There are 60 licensed ever, its monopoly position is changing natural gas distribution companies in from 2009. A competitive gas market the Turkish gas market of which 4 are in Turkey is shaped by the Natural Gas owned by municipalities and the reMarket Law which was issued in 2001. maining 56 are private companies. The According to the Law, a gas release privatization tender for İzgaz was comprogram was started and a tender was completed for the transfer of the gas im- pleted; Başkentgaz and Igdaş are to be port rights under 4.75 bcm of BOTAŞ’s privatized. Tenders for the remaining contracts (14% of actual natural gas im- cities are planned to be completed by ports). Following the program, the four the end of 2011 . 78% of the Turkish fuprivate sector companies which won the els and lubricants supply market is con-

trolled by Tüpraş and the biggest fuels retailer in Turkey is POAS, a former state company. BP, Shell and ConocoPhillips are the other active companies . In the petroleum refining market, Tüpraş has a strong monopoly position with 4 sites located in Izmit, Izmir, Kırıkkale and Batman. Total combined capacity of Tüpraş is over 600,000 b/d. In September 2005, a 51% stake in Tüpraş was acquired by a consortium led by domestic group Koç Holding and Shell Co for US$4.4 billion.Turkey has one non-Tüpraş refinery which is the Ataş plant in Mersin. The plant is owned by BP (68%), Shell (27%) and domestic fuels supplier Turkpetrol (5%) .

Sector Outlook Driven by high industrialization and urbanization, electricity demand has exceeded electricity production and largely resisted even the global financial crisis. The increase in demand is expected to continue with the population growth and economic development in future and Turkey is expected to outpace its European peers. TEIAŞ projections for 2009-2018 include 4 different scenarios. The high demand scenario accompanied by high capacity has been considered and presented below. There are also three other scenarios with lower demand and capacity estimates. Electricity demand is expected to exceed electricity generation with a CAGR of 7% between 2009 and 2018. The reliable electricity generation is expected to increase by 3.2% CAGR while installed capacity is expected to EurasiaCritic April 2010 35

Special Report

increase with 3% CAGR in the coming 5.5% in 2009 and recover with an indecade. While thermal capacity formed crease of 2.5% between 2010 and 2013. 64% and HEPP 34% SWOT Analysis of the total installed A competitive gas capacity in 2009, the market in Turkey is Strengths share of thermal cashaped by the Natural pacity is expected to -Well-organized Gas Market Law slightly decrease to and structured legal which was issued in 60% whereas HEPP framework in the en2001. According to capacity increases to ergy sector 38% by 2018. The oil -EMRA operatthe Law, a gas release import level is expecting as an independent program was started ed to rise in line with market regulator and a tender was demand and increasing -High growth pocompleted for the prices assuming an avtential of the Turkish transfer of the gas erage of US$ 80 /barEnergy sector comimport rights under rel in Turkey by 2013 pared to other Euro. On the other hand, pean countries. 4.75 bcm of BOTAĹ&#x17E;â&#x20AC;&#x2122;s growth in natural gas is -Advantage of Turcontracts (14% of expected to exceed pekey operating as an actual natural gas troleum and coal conenergy hub between imports). sumption. The natural Europe and the Midgas consumption is exdle East. pected to increase with a CAGR off 7% between 2010 and 2013. In 2008, Electricity coal consumption in Turkey was 92.8 -Increase in the weight of the primillion tons which was mainly used for vate sector through the privatization of power generation. Coal consumption state owned generation assets in Turkey is expected to decrease by c. -Probable horizontal and vertical 36 EurasiaCritic April 2010

mergers of electricity, natural gas and water distribution, to allow synergy and regional utility companies

Natural Gas -High gas demand growth potential -Favorable gas supply geography and infrastructure -Potential role as a transit corridor and potential for development of trading hubs

Weaknesses -Electricity -Coal is the only energy source with significant domestic availability, leavingth ecountry increasingly import-dependent

Natural Gas -Requirement for gas storage for system security reasons -Import dependence on natural gas supplies

Opportunities Electricity -Privatization of regional distri-

Special Report bution companies (to be finalized by 2010) will allow for an independent merchants’ market -Synergy expected to be created between electricity, natural gas and water distribution businesses Natural Gas -Tenders for the remaining cities, gas requirements to be met by end of 2011 -Privatization of municipality owned natural gas distribution companies. -Restructuring of Botaş and competitive market structure transition to a Interest of foreign investors in the natural gas distribution market.

Threats -No new contract releases are announced/expected in the short term -Shortage of electricity supply against electricity demand.

Investment Opportunities Turkey is a major energy importer with energy consumption exceeding its production. For Turkey to meet its energy demand, significant investments are necessary in the energy sector. The transition of the Turkish electricity market to a liberalized market has already attracted private investment from both domestic and foreign investors and further opportunities will occur. Among the investment opportunities, the state owned generation and distribution assets together with new power plant establishments can be indicated. Turkey has experienced a lively investment environment in the last five years in which many foreign investors have made greenfield investments, entered into partnerships with local players and acquired state-owned and private companies. Below is a list of M&A transactions by foreign investors in the Turkish energy industry between 2004 and 2009: The Turkish government is in the course of privatization of the distribution companies as a step towards full liberalization of the energy market. There are 101 assets with total capacity of 15,594 MW which are to be privatized: -18 thermal power plants (11,769 MW)

-27 hydro-electric power plants of EUAS (3,677 MW) -56 run-of-the-river power plants (148 MW) There are 21 distribution regions under the Turkish privatization portfolio. Kayseri region was the only private region and currently, the privatization tenders for 4 DisCo’s have been finalized, although one has been cancelled by the Council of State. The competitive environment as a result of the privatizations is expected to accelerate electricity generation investments. Abbreviations b/d - Barrels per day Bcm - billion cubic meters BMI - Business Monitor International CAGR - Compound Annual Growth Rate CCGT - combined cycle gas turbine DisCo - Distribution Company EIU - Economist Intelligence Unit

EMEA - Europe, Middle-East and Africa EUAS - Electricity Generation Co.Inc. EUR - Euro GDP - Gross Domestic Product HEPP - Hydro Electricity Power Plant IEA - International Energy Agency ISE - Istanbul Stock Exchange ISPAT - Republic of Turkey Prime Ministry Investment Support and Promotion Agency (ISPAT) KCETA - Kayseri Region Electricity Company (Kayseri ve Civarı Elektrik T.A. ) LNG - liquefied natural gas OPEC - Organization of the Petroleum Exporting Countries PED - primary energy demand Rmb - Chinese yuan US - United States US$ - US Dollars TEAS - Turkish Electricity Generation and Transition Co. TEIAS - Turkish Electricity Transmission Company TEK - Turkish Electricity Authority TETAS - Turkish Electricity Trading Company TPAO - Turkish Petroleum Corporation EurasiaCritic April 2010 37

Eastern Europe

Choice of Ukraine By Shemsey Vodinov

38 EurasiaCritic April 2010

Eastern Europe

arty of Regions which known with alternative north and south energy with its close relations with Rus- lines. sia, had won the elections and Energy Balance in the Eastern finished up the era that shake Soviets and called as Orange Revolutions Era. and Western Dnieper Question in the agenda is on Ukraine’s Yanukovich not only tried to solve choice on new strategic issues especially the energy problem with those guaron energy. New energy chart seems to antees he also offered assigning 1/3 change the parameters of the region of Ukraine’s administration of natuwhile an alliance with Russia is predict- ral gas transmission system to Russia able. Victor Yanukovich who is the lead- (Kommersant Newspaper). Man of the er of Donetsk centered Part of Regions, is a former welder worker. Yanukovich went into politics in 90s and he was supported by Russia President Vladimir Putin in the beginning of 2000s. After the Yanukovich’s confession of their graft in the elections he lost his power in Ukraine and country surrendered to Western supported Orange Revolution. Country’s progress in five years which was expected to lead country to NATO membership was written to history Russians punished the as a period of increasKiev Government with ing discontent. Presiaccessions to natural dent Yushchenko and gas and deduction of Prime Minister Yunatural gas because of lia Timoshenko who turned their back to Kiev’s policy of getting Russia, caused natural closer to the West. gas crisis every winter period which harmed Ukraine because 1/5 of the natural gas passes through Ukraine which is sold to Europe by Russia. Russians punished the Kiev Government with accessions to natural gas and deduction of natural gas because of Kiev’s policy of getting closer to the West. Military issues were another source of crisis. Center point of Russian Navy Forces, Sevastopol in Crimea was the centre of this crisis. In spite of the Yuşçenko administration’s approach which defends removal of Russia forces from Sevastopol in 2017 according to the agreement, Yanukovich defended Russian existence in Crimea. Yanukovich told that Russia could stay in Crimea and Ukraine will not be a member of NATO by himself to Russian President Dimitry Medvedev while his visit to Moscow after the elections. Yanukovich tried to convince Medvedey for not bypassing Ukraine

day Yanukovich, did not forget to visit Brussels and gave natural gas guarantees while he was visiting Moscow. In this way, he gave concrete guarantees both to Russia and EU. Question on the agenda is nowadays is if Russia will make a discount on natural gas prices which Ukraine demands from Russia. Also Russia may abandon the southern stream program but Russia cannot abandon the northern stream which is

EurasiaCritic April 2010 39

Eastern Europe

guaranteed to Germany and France. At effort on this issue. Ukraine is divided this point, Medvedev cannot make the by two on the axis of Dnieper is defined discount which Ukraine demands but as Russia’s territory by Moscow, gains a Russia can aid Ukraine by giving cheap meaning only by being united. Europe admits that Ukraine is a part credits and economic support to not to of Russia strategically but Germany and disappoint Yanukovich. Dnieper River which was witnessed France did not welcomed Ukraine’s 2 million peoples’ death while the So- membership to NATO and EU in their recent statements. viet Red Army and EU’s priority is its natGerman Nazi Army Dnieper River which ural gas demand. 1/4 of battle, is now separatwas witnessed 2 this demand is met by ing Ukraine’s politimillion peoples’ death Russia. Energy issue is cal geography. Today, while the Soviet Red stabile in the region so Russian friendly poliArmy and German Brussels does not care tics in the east of this Nazi Army battle, about how this region river has the power. builds its stability. AfThis situation affects is now separating ter this political picthe conditions in the Ukraine’s political ture in Ukraine, Euwest of Dnieper which geography. rope speeded up the NATO come to its investments which cost borders after Hitler’s dollars. A secret or open agreemarch to those borders after ft 60 years. billion billi d ll Political consolidation of Ukraine in ment between Continental Europe and the future is not certain but it is abso- Russia can be predicted. Main problem lute that Yanukovich will have a strong is US’s future movements. Soros sup40 EurasiaCritic April 2010

ported Orange Revolution Wave finished by 2009. Main aim of US is to determine and control the energy lines in Central Asia and Caucasia. Apparently, energy alliance between EU and Russia weakens the US role in Eastern Europe and in Western Eurasia. Serbia was welcomed by EU with staying close to Russia, this can be a signal for Ukraine to follow the same strategy. As like Yanukovich’s priority, Ukraine may get economical aid from EU although Ukraine does not become an EU member.

Ukraine-Turkey-Russia Relations Turkey recognized Ukraine as a country in 1991, 16th of December. These two countries are working together within the Black Sea Economic Cooperation Organization since 1992. In June 1997, an agreement signed for building the a pipeline between Baku and Ceyhan for transportation of crude oil in Ankara. Turkey is the second big-

Eastern Europe gest trade partner of Ukraine after Russia. Turkey is importing iron and steel products, lard, herbal oil and mineral fuels from Ukraine and exports plastic, electronic machines, cleaning products and sub-industry products to Ukraine. Turkish Embassy of Ukraine was opened in 1993. Ukraine also has a Consulate General in Istanbul, Honorary Consulates in İzmir and Çanakkale. Turkey Embassy of Ukraine is in Kiev and there is a Turkish Consulate General in Odessa. Turkey does not have an interest on the government in Ukraine. Both international public and Ankara agree that election results of Ukraine will not effect Turkey’s role of being a transit country in recent years. Natural gas experts warn that an eventual KievMoscow partnership would weaken the Ankara on an energy bargain. Ankara expected to play the stability card against this issue. The positive course on Kiev and Moscow relations which was started with Yanukovich’s election victory is not expected to dismiss Turkey from the energy transportation game. An energy expert from Turkey, Necdet Pamir interprets the situation as: Election victory of Yanukovich will enables the transportation option of Ukraine for Russia. This result also strengthens the Russia’s hand at negotiations with Turkey. However Turkey is an important option for Russia and it is impossible for Russia to by pass Turkey. Negotiations which are made by Turkish Energy Minister Taner Yıldızlı is a package negotiation. Russia’s increasing advantage on the negotiations would affect other parts of this package. Negotiations continue on giving nuclear energy to Russia without a bid by a intergovernmental agreement. Strengthening of Russia’s hand on natural gas will make Russia advantageous in nuclear energy negotiations because negotiations are held as a whole. (Akşam Newspaper, Interview with Ezgi Akın)

Eurasia is Rising Europe and Turkey will have to assess new positions against the pressure

caused by regional dynamics. North Atlantic relations will constrain Ankara and Brussels at this point. One of the most determining element of strategy is energy issue so economics will face processes which will determine next 10 years’ world. Increasing advantage of Russia is not the only issue but reel politics’ increasing importance. EU and Russia are associating on a more realist survey. Turkey is joining this process naturally. NABUCCO and similar projects which will planned for the benefit of US and extracting Russia, will be re-

constructed on a realist survey too. In spite of general view or view of western analysts statement that Russia’s impact on Ukraine will not harm the stability, it is a natural result of geopolitics. This is a turning point of new cooperation period in Eurasia. Future is not expected to bring Dnieper wars and conflicts which are remnants of Second World War, future will be a partnership period around the axis of energy in the Eurasia. This era will start to show itself by economic and political means, rising of Asia will occur as rising of Eurasia. EurasiaCritic April 2010 41

Privatization of Energy

Liberalization Problems of Turkish Energy Market By Sureyya Yucel Ozden

42 EurasiaCritic April 2010

Privatization of Energy

denying the electrical n this century we When all investment energy developments are living in, it is demand in energy in Turkey, it should impossible to understand or interpret be admitted that there sector is calculated, any issue or case withare lots of minor and $130 billion of out the energy perspecmajor problems in financial need is tive. Energy use is acTurkey about enerexpected in the tually a life sustaining gy. Two perspectives upcoming 10 years. action. When looking needed to understand It is hard the answer when handling the at issues like lightning, national and internaeducation, heating, the question that How tional problems. water, communication, could this financial A- Internal aftransportation, health need problem solved? fairs of Turkey and industry every sinB- Conditions in gle part of human life bases on energy. Briefly, energy is the Turkeyâ&#x20AC;&#x2122;s International Relations basic element of civilization. Until near Internal Affairs of Turkey past, basic elements for life were water, air and earth. It will be appropriate 1- Turkey is having problems with to say that electrical energy should be transforming public energy sector to added to this list. In this sense, without private energy sector. To regulate ener-

gy use, production and transformation, many regulations and laws are enacted. Laws on energy and their dates of release are listed below. Law No: 4628, Electricity Market Law, 3 March 2001. Law No: 4646, Natural Gas Market Law, 18 April 2001. Law No: 5015, Oil Market Law, 20 December 2003. Electricity Sector Strategy, 2004, Amendment No: 5177 on Law No: 3213 Mining Law, 5 June 2004. Law No: 5307 Liquid Petroleum Gas Market Law, 2 March 2005. Law No: 5346 Law on use of Renewable Energy Sources to Produce Electrical Energy, 18 May 2005. Law No: 5627 Energy Productivity Law, 2 May 2007. EurasiaCritic April 2010 43

Privatization of Energy

and Energy Market Law on GeoAnother important Regulatory Authority thermal Sources and problem is in the which is an another Natural Mineral Wause of energy. Illegal regulation body of enters, 13 June 2007. Law No: 5710 ergy. Communication use of electricity, Law on Energy Exand cooperation probLose of power while port, Constructing and lems also occur in the transmitting and Managing Nuclear other bodies related distributing electricity Power Plants, 21 Nowith energy too. Othand problematic vember 2007. er private associations energy structure of Sector defined itwhich are expected to self in many means and invest on energy, have the industry causes ambiguities overcame still many complaints the extra energy mostly. This transforabout many issues. consumption when mation is important 2- Supply Secompared to energy and Turkey has not curity is an another production. full liberalized its enimportant problem ergy sector yet. There which still exists in is a lack of communication ation and coop coop- energy sector sector. There is a 75% foreign eration between Ministry of Energy dependency for answering the demand and Natural Sources which is the main on primary energy. For instance there responsible in the governmental level is a 50% dominance of natural gas use 44 EurasiaCritic April 2010

at producing electrical energy. Payments which nearly worth $ 50 billion is reported for the energy input of petroleum, LPG and natural gas. These payments are composing the Âź of the imports and it is an important part of export which worth $132 billion.

Investment Demand 3- Another important problem is the increase of energy demand. If hesitation caused by economic crisis in 2009 does not taken into account, demand increase of primary energy is 5% per year and demand increase of electirical energy is 7% or 8% per year. The issue of answering this demand should be considered. It is predicted that electric consumption of 196 billion Kw/h in 2009 will be increased to 420 billion Kw/h in 2020. According to this prediction the established power of 43000 MW should

Privatization of Energy be upgraded to 96000 MW by a 2 times increase. When all investment demand in energy sector is calculated, $130 billion of financial need is expected in the upcoming 10 years. It is hard the answer the question that How could this financial need problem solved? 4- Another important problem is in the use of energy. Illegal use of electricity, Lose of power while transmitting and distributing electricity and problematic energy structure of the industry causes the extra energy consumption when compared to energy production. In the light of this information expecting a productive use of energy from citizens becomes a senseless expectation. 5- There are other problems apart from building a continuous supply security, demand management, decreasing the foreign dependence, finding appropriate financial support for investments and environmental problems: Taxes on fuel consumption. tries. In spite of consumers’ cheap Countries which have their energy demand, investors’ high selling own energy resources do not hesitate price demand. to use the energy card in international Delays or idleness on using lo- relations. cal resources for enInternal energy production. ergy policies would While analyzing Cancellations affected from internaenergy politics, of the bids which held tional relations or the this result comes for nuclear power world energy politics forward: energy is the plants. would have a huge imLacking conmain engine of the pact on internal energy struction of natural policies. economic and social gas storage facilities. Problems and quesdevelopment; energy Source divertions about Turkey’s should be produced in sification difficulties. energy policies come a competitive liberal forward when the isInternational market with qualified sues are analyzed with Dimensions and safe conditions the facts listed above. Prominent issues Briefly these problems continuously at in international relaare: minimum cost. tions analysis: A) What is the Geopolitical aim of Turkey in relocation of Turkey: 70% of the world’s spect to its international position? oil and natural gas sources are within Is Turkey want to become an energy the countries around Turkey. In other bridge or energy terminal or both? words Turkey is located between the Does Turkey make any preparations countries which have hydrocarbon re- according to these aims? How does the sources and the countries which de- future of Ceyhan City planned in remand hydrocarbon. Turkey is in the spect to field use, transportation, induscenter of Caspian Countries, Middle trial future, residential planning and all East Countries and European Coun- other perspectives?

B) What is the current situation at NABUCCO project? Which countries assured to transfer gas to Turkey? C) How does the capacity increase of the Blue Stream project to 32 bcm affect the projects such as Iraq Natural Gas Pipeline, Egypt – Turkey Natural Gas Pipeline and Qatar Pipeline after the Baku-Tbilisi-Ceyhan Pipeline? D) How does the issue of providing Turkey’s energy security finalized by agreements with Iran, Iraq, Azerbaijan, Russia, US and EU? E) What kind of an approach will Turkey have after the KYOTO Protocol? CO2 and greenhouse gas emission is one of the contemporary problems of the world. How does Turkey behave towards this problem? Each topic above have different dimensions in themselves. While analyzing energy politics, this result comes forward: energy is the main engine of the economic and social development; energy should be produced in a competitive liberal market with qualified and safe conditions continuously at minimum cost. For solving problems which are explained briefly, Turkey needs to be governed successfully with the national and international consciousness. EurasiaCritic April 2010 45

EU Expectations

The EU’s Energy Politics By Dr Dimitris Tsarouhas Introduction

he Lisbon Treaty is meant to usher in a new stage in European integration. The smooth functioning of the institutions, new bodies to coordinate policy and a better decision-making process are its main accomplishments. How these will translate into policy practice is uncertain. For the time being, enthusiasm is limited due to intra-institutional squabbles and the failure of the Union to inspire its citizens. This was not always the case. Over the 1980s and for a large part of the 1990s, the European Union became the focal point of innovative politics the world over. The main reason was the realistic and at the same time idealistic decision of its member states to pool their sovereignty in economic affairs and create the world’s largest single market. Today, however, intra-state antago-

nism is on the increase and intergovern- ties that had created the European mentalist considerations prevent closer Communities, it also ‘brought major cooperation. Energy politics is a case in cooperative arrangements more firmly point, precisely because dependence on within the framework of what may be oil and (especially) gas termed the Communiis so varied among EU ty process’ and granted Energy politics is a member states. new decision-making case in point, precisely In what follows I powers to the Council because dependence start with reviewing of Ministers and the on oil and (especially) how the single marEuropean Parliament. gas is so varied among ket became possible In addition, the EU member states. before discussing EuSEA incorporated rope’s energy politics into the Rome Treaty agenda. I conclude b by arguing thatt the i th th conceptt off cooperation in economic European synergies on energy politics and monetary policy and paved the way are needed if the Union is to match its for EMU. More importantly, the SEA economic clout with geopolitical power. signalled the willingness of Europe The ratification of the Lisbon Treaty to reform and expand its institutional could be a step in that direction. machinery to face off the economic challenge of the United States and JaForming a Single Market pan, whose competitive advantage had The signing of the Single European grown over the previous decade. In all Act in 1986 was a historic step forward these respects, the SEA proved the cruin the institutional development of the cial turning point in the history of EuroUnion. Apart from modifying the Trea- pean integration. It was the brainchild of an activist Commission, put in place under the leadership of the French Socialist Jacques Delors. Delors wished to mark a new beginning for the Community, whilst at the same time empowering the marginalized Commission. The Single European Act is therefore the one piece of legislation that unlocked Europe from past inertia and introduced the legislative conditions enabling the Community to move beyond a predominantly intergovernmentalist perspective.

Gas Supply and the Russia factor There is a marked difference in the oil and gas markets. While the former functions pretty much on the basis of predictable prices and pretty secure 46 EurasiaCritic April 2010

EU Expectations supply, gas supply is very much depend- the same extent. In fact, member states ed on pipelines due to the nature of such as Spain have no dependence on the product. The logical consequence Russia whatsoever, and can therefore of that is that gas supply becomes en- make their policy calculations regardmeshed in geopolitics and the relative ing Moscow in a markedly different way power leverage the Union can have vis compared to the Baltic states or Poland, a vis its main suppliers. whose dependence on Russian gas is Russia is here the world’s most im- absolute. portant player as it is the largest proWhat is certain is that Russia is ducer of natural gas and has the larg- well aware both of EU divisions on the est proven gas reserves. The Union, by contrast, produces only one quarter of what it consumes. For the foreseeable future, the EU will be dependent on Russia and the question that emerges is how this relationship can be managed to The Single European avoid conflict and seAct is therefore the cure supply in the long one piece of legislation term. that unlocked Europe What is the main from past inertia goal of the EU at this moment in time? The and introduced Union has declared the legislative that it wishes to estabconditions enabling lish a ‘balanced’ partthe Community nership with Russia to move beyond on the issue and has a predominantly been asking for the renewal of the PCA, the intergovernmentalist Partnership and Coperspective. operation Agreement between the two sides. The original agreement dates back to 1997 and is the framework within which bilateral trade relations are managed. Energy relations are but one of the items on this agenda and the negotiations between the two sides are ongoing. The PCA therefore addresses the issue of energy though it is by no means limited to it. The 2009 Russia-Georgia war cast a shadow over EU-Russia relations, and it revealed that the Union remains deeply split on the issue. While some countries (mostly CEE states) push for a tough stance towards Moscow, old and powerful member states wish to maintain good relations with Russia, even at the cost of disappointing some new entrants. Furthermore, it is important to stress that not all EU member states are exposed to the Kremlin’s ability to control gas supplies in Europe to

subject and its own ability to influence western policy. The prominent role of Gazprom, aided by the Kremlin, is no coincidence. What is Russia’s objective on this issue? Russia’s dominant position in the vital gas market and the pipeline diplomacy necessary to achieve stability in supply means that Russia has been able to use its position for political rea-

EurasiaCritic April 2010 47

EU Expectations

sons. This, in turn, is part of the larger Russian narrative of grievance and the insistent complaints levelled towards the west for the way it sought to exploit Russia’s weakness in the early post-Cold War era. The chaos of the time has left its mark on Russia’s attitude towards the west and suspicion has been ripe for quite some time. Following Putin’s 48 EurasiaCritic April 2010

is currently busy financing various gas and electricity projects to prevent a future supply crisis in an attempt to insure itself against unpredictability and pipeline politics. The EU claims that securing supply diversity is a key priority and has therefore backed projects such as Nabucco, a project aiming at delivering Caspian gas to Austria from Turkey thus lessening dependence on Russia. Despite the signing of the Intergovernmental Agreement on the project in July 2009 and its recent parliamentary ratification by the Turkish Parliament (the countries involved including transit are Turkey, Russia’s dominant Bulgaria, Romania, position in the vital Hungary Austria) gas market and the question marks repipeline diplomacy main s to the efficacy of this private-sector necessary to achieve project, the amount stability in supply of gas secured and means that Russia has the alternative routes been able to use its mapped out. Moreposition for political over, Nabucco’s rival, reasons. the Kremlin-backed South Stream that will deliver gas from Russia to Europe via Bulgaria, Greece, Serbia and Croatia to Italy. In August 2009, Russia and Turkey agreed that the proposed pipeline will be able to pass through Turkish territorial waters. Russia and the EU both deny the alleged rivalry between the two projects. These are but two of the prominent examples highlighting the role of pipeline politics in the context of EU-Russia relations as the old continent is scattered with plans and ongoing pipeline projects all scrabbling for security and good positioning in the gas match. The American factor should not be left outside completely. Russia’s arrival to power, that grievance mani- actions in Georgia and its behaviour fested itself in a new type of neoreal- in what it sees as its ‘near abroad’, esist policy towards the west. Disrupting pecially Ukraine, highlight its intense gas supplies for a brief period in 2006 displeasure from US-backed initiatives was a warning shot. In early 2009 Rus- to incorporate those countries into sia stopped supplies to Ukraine over a NATO (similar to what happened with payment dispute leading to a (literally) CEE states earlier). The recent NATO frozen landscape across much of East- Summit in Bucharest provided further ern Europe for two long weeks. Europe evidence of many EU states’ unwilling-

EU Expectations

ness to sacrifice a level-headed political relations already seem to have been relationship with Russia for the sake stabilized again. Meanwhile, the US of NATO expansion in former Soviet and Russia are close to a very hopeful, territory. Whether this policy can be new nuclear treaty to halve the number reconciled with the alleged willingness of their nuclear stockpiles. Obamaâ&#x20AC;&#x2122;s arby Brussels to push rival to the White House the Kremlin on its is already producing visEnergy is explicitly human rights and ible signs of improvement mentioned in the civil liberties record in US-Russian relations. Lisbon Treaty and is a different quesConclusion: EU that is a first for such tion. Meanwhile, Energy Politics and the realization a document. More the Lisbon Treaty that all three (US, importantly, energy Europe, Russia) Last December, the policy has shifted need each other Lisbon Treaty finally away from unanimity in the face of chalcame into effect. After voting towards lenges such as the a decade-long process qualified majority. Iran question leads of soul-searching, failed many to predict a referenda and endless soothing of relaarguments about integrations in the near future. Following the tion, the Union now has a better tool Russian-Georgian war and the tension to address global policy challenges and this was accompanied by, EU-Russia coordinates the work of its institutions

more effectively. Energy is explicitly mentioned in the Treaty and that is a first for such a document. More importantly, energy policy has shifted away from unanimity voting towards qualified majority. This should in theory make it easier for the Union to reach quick and effective decision on energy. Solidarity on energy supply is pledged by Brussels to member states and that is a gesture to countries that have been affected by the recent crises mentioned above. If it is more than a token gesture remains to be seen. A common energy policy is now an official EU objective. Pipeline politics reveal that this may still be a far-fetched goal. Lisbon, however, has brought it a tiny step closer to reality. For the sake of European integration, energy constitutes a vital policy area where new initiatives can pave the way for integration. EurasiaCritic April 2010 49

Russian Perspectives

Supply Perspectives of Russia Kremlin Winking at NABUCCO

t was not expected that increase of production, growth and prosperity would arise Russia again. This period which was started with the collapse of USSR, had reached its peak with the increase of oil prices by the impact of

NABUCCOSouth Stream Comparison

NABUCCO countries have an import amount of 80 bcm per year. Russia established a 900 km long pipeline project called South Stream which is passes through 2000 m deep of the Black Sea and connects to Bulgaria gas network. South Stream pipeline will divide into two directions. One direction will reach Austria through Serbia-Hungary route and the other direction will reach to Italy through Greece. Italian ENI company is an important partner of Russia in this project. NABUCCO country Hungary is also participating South Stream project. Kazakhstan and Turkmenistan which does not have a tendency to provide gas to NABUCCO, signed a gas agreement with Russia for South Stream Project. South Streamâ&#x20AC;&#x2122;s capacity will be 30 bcm/year in the beginning then capacity will increased to 63 bcm/year. South Stream does not have problems such as providing gas and it will be finished before NABUCCO in 2015. 50 EurasiaCritic April 2010

By Ozer Cetinkaya US invasion of Afghanistan and Iraq. grown-up bear and it challenges AtlanMoscow government made a strategic tic Alliance. If Moscow is the body and decision in 2000. Control of Russian Kremlin is the brain of this bear, GAZeconomy should be transferred to the PROM and LUKOIL are the claws of this bear. state solidly. Economy had transformed to a Europe and Russia embraces new system which is Russia Europe with its strong based on raw material claws like a grown-up exportation. InvestEurope and Rusments were slipping bear and it challenges sia are onto forming towards EU mema strategic partnership Atlantic Alliance. If ber Eastern Europe since the US invasion Moscow is the body and Pacific. Energy of Iraq. This progress and Kremlin is the demand in these reis leaded by Germany. brain of this bear, gion was expected to The basic element of GAZPROM and increase slightly per strategic partnership year. Besides all these, LUKOIL are the claws is economics actually Russia stands in the and energy has the of this bear. middle of EU and Pamain role in the ecocific and Russia connomic cooperation. trols the energy valve. Plan was worked Europe is importing %40 of its natural well in the last 10 years. Russia embrac- gas from Russia. 2/3 of Russian gas exes Europe with its strong claws like a port is with Europe. EU also imports

Russian Perspectives

the 1/3 of its oil demand and ¼ of its vest on new areas. Russian companies have a tencoal demand from Russia. European companies are the main investors at dency towards Asia. Russian energy polRussian oil, gas and icy and supply perspecelectricity sectors. EU preferred to trust tives are more likely Russian energy gifar Islamic countries to aiming at gaining ants’ role in Euroenergy instead of economic power than pean Markets is also establishing an energy gaining political power. rising. Mutually and Russia will become a strongly developed partnership with bigger power by ecoEuropean – Russia Russia. Ambiguities nomic income. It means relations in recent like invasion of Iraq the Russia’s becoming years disturbs Washand Iran’s future a global, independent ington. Washinghelped Europe to see power in the conditions ton brought up the their strategic mistake. of 21st century. threat of dependency to Russian energy for EU steps seems to be Is the Islamic Europe. Arguments the efforts for fixing Countries brought by Washingthe strategic mistake True Choice? ton are stated as the by tactical steps. vital for EU: What is the meanMoscow is ing of spreading Russia using energy as a political weapon. frighten among Europeans? EU had Russian companies do not in- given a long list of duties. Decreas-

ing the state role in Russian oil and gas market is the first duty on the list. Concerns of Europe are not derived from Moscow, main source of these concerns is Europe itself. Enlargement towards eastern countries was the role for EU which was designed by Atlantic Alliance. Atlantic bounded European Countries lost their ability of strategic thinking while they are trying to understand their role. EU preferred to trust far Islamic countries energy instead of establishing an energy partnership with Russia. Ambiguities like invasion of Iraq and Iran’s future helped Europe to see their strategic mistake. EU steps seems to be the efforts for fixing the strategic mistake by tactical steps.

Will Kremlin Participate to NABUCCO? What if Russia does not have a desire to produce more natural gas? This question is an argument brought for EurasiaCritic April 2010 51

Russian Perspectives

scaring Europe in fact. For supporting this question, decrease of Russian oil produce which was had a growth capacity of 8% for years, since 2007 is stated as evidence. Situation may seem like this when looking at it for one, but it should not be forgotten that 2007 global economic crisis is still effective. Economies are shrinking and countries such Greece and Spain are in the edge of bankrupt. Even there is a positive

movement in global economy in 2010; its reflections can only be seen after 2011 on Russian energy production. Demand decreasing also decreases the energy prices. Russia’s response would be a decrease in production. Gazprom will continue to be the leader in the gas production with its financial power and with its ability of strategic planning. Gazprom will reach till the North American market with its LPG raid.

Production Strategy of Russia

xpected oil production in the Russia’s 30 year plan for energy is 490-520 million tons. 200-215 million tons of this production will be expended by internal consumption. 100-105 tons are planned for Asia52 EurasiaCritic April 2010

Pacific region. 30-35 million tons of the rest will be reserved for Commonwealth of Independent States. The rest 150-160 million tons above the amount sold to Europe in 2001; 181 million tons.

Two main issues will determine Russia’s energy strategy in the future: 1- Participation to NABUCCO 2- Partnership with China in big projects. Germany requested Kremlin to participate NABUCCO project in senior level. This request shows the tactic change of EU which is problematic with finding gas sources. Kremlin has not decided yet. Attitude of Azerbaijan and Turkmenistan will be effective on this decision. If Azerbaijan and Turkmenistan decide to develop cooperation with Russia, Russia will accept to participate NABUCCO. Russia advanced to be a real alternative for Azerbaijan. Azerbaijan assumes the rising in Europe as the most important potential strategy so Azerbaijan desires to canalize its consumers to put pressure on Turkey. Natural gas which will reached

Russian Perspectives

Supply-Demand Expectations for EU YEAR

GAS DEMAND

EU PRODUCTION

DEFICIT

RF SUPPLY PLAN

2015

614 bcm

282 bcm

332 bcm

250 bcm

2030

694 bcm

217 bcm

467 bcm

to Russia by Azerbaijan is 500 mcm per year. This amount does not make Azerbaijan advantageous. Azerbaijan’s other neighbor Iran demands gas in winter months especially Northern Iran. Turkmen gas meets the Iran gas demand already. New pipeline which was started operating, is enters Iran through Devletabad. This pipeline and KörpeceKurtköy pipeline can provide 14 bcm of natural gas per year. This capacity may increase to 20 bcm. Also Azerbaijan exports natural gas with advantageous conditions. With the agreement which will be active until 2013 1.5 mcm of natural gas per day will be transferred to Georgia. Subject of extending the agreement is another issue. All these issues bring up the GAZPROM as a real alternative for Azerbaijan.

New Plans of Russia Moscow prefers to establish partnerships with local energy distributors to ensure Europe’s trust instead of increasing energy production. Situation is same in the Asia-Pacific region too. Studies on huge projects continue by the association of GAZPROM and China. Fundamental issues in Russia’s new strategy proof this point: a) Diversifying export market. b) Diversifying product application areas. c) Focusing on Asia. Under those conditions Europeans should look forward to sign long term supply agreements instead of concerning about energy dependency to Russia. Russian entrance understood as a new threat for Europe. In fact, Russia’s partnership with Nigeria, Algeria and Libya provides new options to overcome increasing demand of Europe. EurasiaCritic April 2010 53

Alternative Energy

54 EurasiaCritic April 2010

Alternative Energy

Turkey’s Policies for New and Renewable Energy By Emin Koramaz

nergy has a strategic dimension increased 35%, and its electrical energy in international policy, dilem- consumption increased 43%. ma and conflicts. If we consider Meanwhile, our country’s depentogether the 9/11 attacks, the invasions dency on foreign energy has reached in Iraq and Afghanistan, the present 75%. Only 25% of our total energy crisis and developments in the world consumption (the equivalent of 107 energy market, we can million tons of petrosee that tendencies If we consider together leum) is being met by in energy issues are local production. We the 9/11 attacks, the headed far from peace can say that Turkey’s invasions in Iraq and prosperity, that 93% dependency on and Afghanistan, delays are possible in foreign oil and 97% the present crisis investments and that dependency on foreign these problems may natural gas will conand developments be intensified. tinue. in the world energy An important rise Our energy loss in market, we can see in fossil fuel prices is industry is at least the that tendencies in also expected due to equivalent of 6 milenergy issues are the difficulty of satlion tons of petroleum. headed far from peace isfying the world’s Our country’s conserrising demand for vation potential is over and prosperity, that petroleum. In global 25%. By exploiting the delays are possible in politics cheap oil and 25-30% energy conserinvestments and that natural gas is going vation potential in dethese problems may be the way of history. cisive sectors it is posintensified. Accepting existing sible to save 5 billion developments as they dollars. It is possible are and developing policies li i iin iincreas- to t reduce d the th h share of the energy cost ing uncertainty will not prevent energy within product cost in manufacture, related problems and social disturbanc- which varies from 8 to 50%. es. As a result, we should not be fooled The main reason that by recent factors such as the 5% de- problems have reached such a crease in Turkey’s demand for electric- scale is that the public service ity. In reality, over the last five years, energy production is seen as Turkey’s primary energy consumption a market activity, and this is

EurasiaCritic April 2010 55

Alternative Energy If we consider together the 9/11 attacks, the invasions in Iraq and Afghanistan, the present crisis and developments in the world energy market, we can see that tendencies in energy issues are headed far from peace and prosperity, that delays are possible in investments and that these problems may be intensified.

56 EurasiaCritic April 2010

Alternative Energy not a strategic planning approach. The cause is the division, downsizing and dysfunctionalization of public enterprises in the energy sector by means of privatization and liberalization policies implemented over the last 30 years. It is due to the encouragement of electric plants that depend on imported natural gas and to the failure to improve, maintain, repair and increase the capacity of our lignite fueled and hydroelectric plants because of commercial promises made to the natural gas plants. It is due to the failure to utilize adequately our rich lignite reserves, hydraulic resources, new and renewable energy sources such as wind, geothermal and solar.

However, it is possible to change this situation. Our suggestions regarding this issue are below.

Suggestions for Necessary Steps in the Renewable Energy Sector 1. “The Draft Law on Supporting the Use of Renewable Energy Sources for Electrical Energy Production” should be revised and submitted to the parliament for ratification.  The restructuring of the renewable energy legislation can be enabled by an integrated general framework law, a “renewable energy strategy and action plan” and a “Turkey

general energy document and action plan,” prepared with the participation of universities, professional organizations, expert foundations and industrial institutions, taking market failures in consideration. Strategy documents and secondary legislation that covers incentives for each investment type such as hydraulic, thermal, wind, solar and geothermal should be separately prepared and 2020-2030-2050 targets should be identified for each resource.  Plans, strategies and targets for the electrical energy sector should be determined, and incentives should especially target R&D and local production. Development of local industries and employment in renewable energy sector should be supported in planning.  The productivity standards of each resource should be determined in order to prevent importing unproductive technologies, inefficient use of resources and the formation of

EurasiaCritic April 2010 57

Alternative Energy

technological junkyards. The world’s of time.  Project feasibility reports beneficial and productive technologies should be encouraged considering the should be the basis of production liminimum productivity of the technol- cense grants.  The secondary legislation to ogy to be used (turbine productivity, be prepared should be panel productivity, clear and based on obsystem productivity, By exploiting the jective criteria. etc). 25-30% energy  In order to  Inventories conservation potential prevent confusion, inof the locations of in decisive sectors it vestments should begin future plants should is possible to save 5 after the legislation is in be prepared ahead effect. of time, making sure billion dollars. It is 2. In order to raise that these locations possible to reduce the awareness concerning do not overlap with share of the energy the use of renewable land uses such as agcost within product energy resources, pilot riculture and urban cost in manufacture, projects should be imdevelopment. which varies from 8 to plemented in all prov A producinces/towns, with public tion-consumption 50%. guidance and contribuplan should be made tions from professional that minimizes transorganizations, universities, government port and distribution losses.  If transport/distribution of the institutions and local governments. 3. It will be a more realistic structure produced energy is obligatory, relevant institutions should determine existing if ETKB follows its actual functions inlimitations of the infrastructure ahead cluding licensing, technically monitor58 EurasiaCritic April 2010

ing and contracting new investments in the energy sector, and EPDK to return to its role of regulation, monitoring and determining flow up investments. 4. The downsizing, dysfunctionalization and privatization of public enterprises in the energy sector should cease and public enterprises should be strengthened. BOTAS and TPAO should be reunited under Turkish Petrol and Natural Gas Institution in order to continue natural gas and oil search, production, transport, refinery, distribution and sale activities in an interated manner while EUAS, TEIAS, TEDAS and TETAS should be reunited under Turkish Electric Institution (TEK) so that electric production, transport and distribution activities are integrated. 5. The main principle of energy production investments should be the minimization of environmental damage. Environmental impact assessment reports and EPDK licence details should be transparent and ‘EIA Appropriate’ documents should be prerequisite for licences to be granted. Investment li-

Alternative Energy cences should be cancelled if previously licensed investments fail to get EIA documents or if previously given EIA documents are cancelled. In applications to renew EIA reports or EPDK licences, fuel changes, especially from coal to imported coal, and extensive capacity increases should not be permitted. 6. Liquid bed technologies should not be used in coal fueled plants and it should be obligatory to have chimney treatment facilities and high efficiency filters in existing and new plants. Air cooling systems should be used in natural gas fueled plants, rater than water cooling systems that diminish already limited water resources. Necessary revisions and capacity improvements in thermal plants should be finalized rapidly, idle capacities should be utilized, technical productivity and readiness of coal based thermal plants should be increased, and measures should be taken to reduce pollution. Privatization of plants that have been rehabilitated by public finance and contracting rehabilitation works to unqualified foreign firms should be stopped. 7. Investments toward reducing loss and piracy in electricity that is around 15% should be made rapidly, legal regulations on conservation and efficiency should be made. 8. Continuing public hydraulic plant projects should be finished by allocating necessary resources. EPDK should monitor the meeting of the construction deadlines it licensed. The importance of this issue is illustrated by the fact that only one of every five hydraulic plant projects licensed by EPDK has investment realization above 35%. 9. The grid connection and system balance of wind plants should be technically investigated, problems should be resolved by R&D support if necessary. 10. The existing capacity for electricity production (500 MW) from geothermal sources should be utilized, tens of thousands of homes should be heated with geothermal water, and the prioritization of the use of geothermal resources for centrally heating dense urban settlements should be obligatory.

11. A legal foundation for the utilization of the solar power potential should be established, secondary legislation should put in to effect according to this law, determination of solar power production technology level, the scope of R&D activities, methods, pilot facilities, production facilities, manufacturing and assembly stages should be planned. Local production of Photovoltaic cells and condensing systems should be aimed. 12. Decrees on norms, standards, minimum performance criteria and procedures for architectural design, heating/cooling needs and equipments, insulation needs and materias, electrical systems and lighting should be prepared by EIE, Ministry of Settlement

and public works and professional organizations, put in effect and implementation should be monitored. 13. The number of academic research institutions such as TUBITAK and Marmara MAM should be increased. Research centers should be established for: solar energy technologies in Mugla, Adana, Mersin and Harran universities; lignite/coal burning technologies in Afsin Elbistan; wind plants in Izmir and Canakkale; geothermal energy in the Aegean region; hydraulic energy in southeastern Anatolia, and biofuel in Cukurova and the GAP region. Emin Koramaz is Turkey Union Chambers of Architects and Engineers (TMMOB) EurasiaCritic April 2010 59

Environmental Problems

Hidden Cost of Dirty Energy By Korol Diker Greenpeace Mediterranean Climate & Energy Campaigner

60 EurasiaCritic April 2010

Environmental Problems

nergy costs have always been a hot topic all around the world. Oil crises, gas pipelines, first investment estimations, etc. are made from an economic perspective. But power generation from each and every Energy sources energy source has adlike coal and ditional costs to the nuclear energy environment and the creates destruction local communities livat every point of ing close. Energy sources like their cycle; from coal and nuclear enmining, processing, ergy creates destructransporting to tion at every point the final wastes. of their cycle; from Mechanical processes mining, processing, during uranium transporting to the final wastes. Mechanimining hazardous cal processes during elements like uranium mining hazThorium, Radium, ardous elements like and Radon-222 are Thorium, Radium, released. and Radon-222 are released. Couple months ago Greenpeace found high radiation contamination levels on the streets of Niger. Nevertheless coal mining also has huge destructive effects on environment. Coal mining causes widespread deforestation, soil erosion, water shortages and pollution. All around the world locations where coal mining is being made the effects make it almost impossible for the local communities to continue to their daily lives.

150.000 additional deaths per year The destruction continues during electricity generation; fossil fuels like coal, oil, and natural gas cause CO2 emissions, which are triggering the catastrophic climate change. Global climate change caused by the relentless buildup of greenhouse gases in the earthâ&#x20AC;&#x2122;s atmosphere, is already disrupting ecosystems and is already casuing about 150.000 additional deaths per year. An average global warming of 2C threatens millions of people with increased risk of hunger, maleria, flooding and water shortages. Besides this, nuclear power,

coal power plants and all other fossil fuels pose multiple threats and damages on people and the environment. On the other hand nuclear energy bearing unacceptable risks to the environment and human beings creates highly radioactive wastes during electricity generation. These and more are the hidden costs of dirty energy sources. They donâ&#x20AC;&#x2122;t reflect to our electricity bills or arenâ&#x20AC;&#x2122;t taken in to consideration when

estimation are being made but usually the real cost is a lot more then what we see in our electricity bills.

Turkey has a solution! On the other hand sustainable growth is a must for governments and the rising demand for energy is the main issue to be solved. In November 2009 Greenpeace proposed a very different way of planning our energy demand EurasiaCritic April 2010 61

Environmental Problems

and consumption. Energy Revolution ation that renewable energies and enScenario1 for Turkey was prepared to- ergy efficiency solutions provide more gether with EREC (European Renew- and better jobs, it looks a lot more susable Energy Counsel). The scenario is tainable than the traditional dirty and providing sustainable growth and at the inefficient energy generation ways. same time showing the pathway of a But to be able to make an energy clean and fare energy future. revolution; to end our dependency to Actually the report showed that Tur- dirty energy sources â&#x20AC;&#x201C;which is also a key might not have to huge budget item in generate that much enTurkish economyRenewable energy ergy and the energy efnew and supportive combined with the ficiency is creating the energy policies are smart use of energy, base of the whole scealso needed. Governnario. Another thing, ment should end the can deliver half of the report is pointing out incentives given to worldâ&#x20AC;&#x2122;s energy near by is that this total new coal and nuclear en2050. Time is running system is less expenergy and develop the out. sive than the reference current renewable enscenario. In 2050 Energy law. To stop the ergy Revolution scenario will be 2 Euro catastrophic climate change, end our cents less expensive for kWh, than the energy dependency and create a clean and fare energy future we must make reference scenario. When we also take in to consider- this revolution; from top to each and 62 EurasiaCritic April 2010

every person. Renewable energy combined with the smart use of energy, can deliver half of the worldâ&#x20AC;&#x2122;s energy near by 2050. Time is running out. Scientific opinion now agrees that the climate change is happening, is caused in large part by human activities such as burning fossil fuels. But Energy Revolution Report2 which is published by Greenpeace and EREC shows that it is economicaly feasible to cut global CO2 emissions by almost 50% within the next 40 years. Also the report demonstrates that renewable energy (wind, biomass, photovoltaic, solar, thermal, geothermal, ocean and hydroelectirc power) is not a dream for the future, it is real, mature and can be deployed on a large scale. References 1-2 For Turkish version please visit: http:// www.greenpeace.org/turkey/press/reports/enerjidevrimi-raporu

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