Turkey privatisations: back on track

by David O'Byrne | Financial Times

Turkey’s ambitious privatisation programme scored another significant success Friday with the successful sale of four more of the country’s regional power distribution companies for a total of $3.46bn.

The sale of the four was completed after more than six hours of open bidding between 16 companies.

The two largest power distributor on the auction block – Toroslar EDAS which distributes in the Adana region and AY EDAS which distributes on the Asian side of Istanbul – were sold for $1.7bn and $1.2bn respectively to Enerjisa, a joint venture between Turkey’s Sabanci Holding and Germany’s E.ON.

The auction win comes just four months after E.ON bought out the 50 per cent stake in Enerjisa previously held by Austrian power group Verbund.

Speaking to reporters, Selahattin Hakman, head of Sabanci’s energy arm, said Enerjisa’s ambitions had broadened since the arrival of E.ON.

Enerjisa already owns Baskent EDAS which distributes power in Ankara and now holds close to the 30 per cent maximum share any individual company can hold in the Turkish power distribution sector.

Of the other two regional distributors that were also on auction, Dicle EDAS which distributes in the Diyarbakir region was sold to the Iskaya-Dogu consortium for $387m and Vangolu EDAS which distributes in the Van region was sold to the Turkerler construction group for $118m.

Birol: Nuclear power key to Turkish energy future

Today's Zaman

Turkey should build “as much nuclear power as possible” to help meet its growing energy needs, International Energy Agency Chief Economist Fatih Birol said in Brussels on Sunday night.

Speaking at the German Marshall Fund's Brussels Forum, the economist qualified his endorsement by saying that nuclear power should only be embraced “with attention given to seismic risks” that could unleash a Fukushima-style accident on Turkish soil.

Birol was unwavering in his endorsement however, saying that Turkey could employ the technology safely and use it to overcome its dependence on foreign fossil fuels. The argument that Germany and Japan are jettisoning the technology also didn't sway the economist, who was quoted as saying: “When we compare Turkey and Germany there are huge differences. In Germany, electricity demand won't even grow 1 percent this year. … But as for Turkey, demand is increasing very rapidly. From this perspective, Turkey must open nuclear power plants.”

His recommendation comes after Ankara's announcement this week that it will begin accepting bids for a newly proposed nuclear plant in the Black Sea province of Sinop. Birol's comments also come amid sustained criticism of Ankara's nuclear plans and a $25 billion nuclear facility planned for the southern province of Mersin, where activists say it faces an unacceptable risk of an earthquake.

European energy security is not up to Europe

      By Alexandros Petersen  | EUobserver

BRUSSELS - It is no secret that Russian dominance of European natural gas markets has splintered the Union.

 

The imperative of having enough heat or cooking fuel in the winter has put countries – especially in central and eastern Europe – in two camps: those who make bilateral deals with Russia’s energy behemoth Gazprom (Western unity be damned), and those who suffer from the disunity and call continually not just for co-ordinated policies to withstand Moscow’s pressure, but also for alternative resources from the Caspian region or elsewhere to diversify supply.

The second camp has it right, but they – as well as Euro-Atlantic institutions – have sabotaged their own efforts by seeking to dictate terms to alternative producers, such as Azerbaijan.

All the while, the pro-Russia camp has made gains.

Earlier in March, Serbia passed a constitutional amendment on land ownership to make it easier for Gazprom to buy up the land it needs for a major pipeline project aimed at increasing southeastern Europe’s dependence on Russian resources and defeating regional plans for diversification. This follows Germany’s joint development with Russia of the Nord Stream pipeline, which connects German consumers directly to Russian fields across the Baltic Sea. It bypasses and undermines the energy security of fellow Nato and European Union members, Poland and the Baltic states.

The problem with these policies is that in making a bilateral deal with Gazprom on natural gas supply, individual European countries are in fact coming in line with Kremlin policy which seeks to divide and conquer the continent.

 

Turkish energy: not enough storage

by David O'Byrne | Financial Times


There is an oft-repeated mantra used to help explain Turkey’s perennially problematic current account deficit: “A $10 rise in the oil price adds $4bn to the current account deficit and half a percentage point to the inflation rate”.

It’s a simplification but it does neatly sum up Turkey’s position as a country with few energy reserves of its own. What it doesn’t tell you is the extent of Turkey’s dependence on imported gas and, given the country’s economic growth, how it is starting to look irreversible. Now the question is whether Turkey can get enough gas at the right time to avoid shortages.

Indeed, as successive speakers at the Gas to Power 2013 conference in Istanbul this week pointed out, the main challenge facing Turky’s energy sector is not how to reduce dependence on gas but rather how to get more of the stuff.

Despite official pledges to reduce the country’s gas burn, efforts to diversify have been slow-moving. Around 40 per cent of Turkey’s power is generated by burning imported gas.

There is an official target of 20GW of wind power capacity by 2023 – but few believe that anything more than a faction of the target is attainable. Incentives to encourage development of low-grade domestic lignite coal are only now being introduced.

More worryingly, new gas-fired facilities are still being developed, with around 9GW already licensed and expected to be commissioned by 2018, for which new gas supplies will have to be found.

Gas in Cyprus – how much of a guarantee ?

by Nick Butler | Financial Times

The controversial bailout deal for Cyprus proposed by eurozone finance ministers has led President Nicos Anastasiades to promise investors who stay in the country after the compulsory forfeit of 9.9 per cent of their deposits that they will share in the country’s future wealth from natural gas.

In return for the forfeit they will be given shares in the banks and what are described in press reports as ” equity returns, guaranteed by future natural gas revenues”.

Whatever equity returns means, nothing can be guaranteed by future gas revenues at this stage. The facts are simple. Only one well has been drilled offshore Cyprus. The field identified – in Block 12 to the South East of the island – is said to contain perhaps 7 tcf of gas. But with only one well there can be no hard estimate. It could be more, but it could just as easily be less. Nor does anyone yet know what the cost of extraction will be.

The head of Cyprus’ State Hydrocarbons Company – Charles Ellinas – said last week that Cyprus could have up to 40 tcf of gas within its exclusive economic zone. He talked about Cyprus exporting gas to Europe via an LNG terminal by 2019.

Yes, and pigs might fly over Nicosia. No one will build an LNG terminal until someone drills more wells to confirm the existing find and several more successful wells on other blocks. The licensing round has barely begun, and interestingly Noble Energy, who drilled the first successful well, are not bidding for more acreage. That is a very odd decision if the company shares Mr Ellinas’ view that the area holds 40 tcf.