SOUTH - EUROPEAN GAS RING IS IMPORTANT FACTOR OF EU ENERGY SAFETY

Turkey locates in two parts of the world - in Europe (Eastern Thrace or Rumelia) and Asia (Anadolu or Anatolia) which divided by important trade-economy and military-strategy international route - Bosphorus strait (Istanbul), Dardanel (Chanakkale) and the Sea of Marmara link the Black Sea with Mediterranean Sea and World Ocean. Geography feature of Turkey is the location at across of important routes from ancient which connected Europe and Asia. There are highway and railway main lines through the territory of Turkey which link Europe with many Asian countries. Turkey is surrounded by three Seas: in the North by Black, in the West by Aegean, in the South by Mediterranean. The length of maritime cast line including the cast of the Sea of Marmara, the straits and islands is 8333 km. The defined area of water's territory by-passing the coast of Turkey is set at 6 sea miles. Turkish territory is 780 thousand sq. km., the population is 64 mln. people. Turkey is the Republic. Chief of state is the president under the Constitution adopted in 1982. Legislative organ is the Great National Meeting. The capital of Turkey is Ankara. On the base of administration the country has 67 ils. Production industry has almost the main place in production industrial sector approximately 6%.

Dr. Hilmi Guler, Minister of Energy and Natural Resources, Turkey

Energy issues are directly related to the level of development of the countries and the social living standards of the communities.

Due to the high economic growth and the new consuming attitudes developing as a result of the rising level of welfare, primary energy consumption of Turkey is also increasing at a rapid pace. However, due to the fact that energy resources of Turkey are not self-sufficient for the country, we'll have to keep importing significant portion of our total primary energy demand in an increasing manner.

By the end of 2001, Turkey's primary energy consumption was about 78.1 million toe. The breakdown of this figure with respect to fuel types is: 39.6% oil, 27.6% coal, 19% natural gas, 13.8% hydro and other renewables (look at Graph 1).

Turkey's primary energy consumption will be about 153.9 million toe in 2010. (look at Graph 2) The breakdown of this figure with respect to fuel types will be: 33% oil, 26% coal, 32% natural gas, 9% hydro and other renewables. Primary energy demand will reach 282.2 million toe in the year 2020.

Gas energy consumption which made 21 bcm in 2004 will reach the level of 55.1 bcm, and in 2020 will make 87.9 bcm. (Look at Graph 3).

Turkey plans to increase its gas import to 73% by 2010, and then to 78% by 2020.

Turkey is the perspective economy partner not only from the point of view as country consumer, but in more level as country of transit to EU countries.

When we look at the continental europe, at present, the european union is one of the largest energy-consuming regions in the world and by far the largest net energy importer with a steady annual growth of 1% per annum since 1990. According to the recent studies carried out by the european union itself, over the next two decades, significant increase in total energy demand is expected in europe, while natural gas will increase its share in primary energy supply as high as 4% from its current level towards the year 2010.

European Union imported in 2001 approximately 45% from the total volume of natural gas consumption. If we look to future then in 2010 is expected the increasing of import up to 59% and up to 77% in 2020. (look at Graph 4)

The EU Commission in Green Paper published in November 2000 confirmed this fact. The paper put emphasis on uninterrupted flow of gas through secured and diversified external energy. The EU decided to identify a category of energy network projects which would be given priority according to European needs and which would also incorporate the candidate countries' energy networks. In this respect Turkey-Greece and Greece-Italy natural gas interconnections are considered within the framework of the "Caspian Sea countries-Middle East- European Union" natural gas priority project. The EU is expecting Turkey to play a key role for transit of gas to Europe.

In this connection, Turkey's geo-strategic location serves for the transportation of the energy sources of the caspian basin to europe and further to the world markets thereby leading the formation of the east - west energy corridor.

However, once again it is worthwhile to mention here that because of the already exsiting heavy tanker transportation through the turkish straits, no additional volumes could be handled.

This natural water way, surrounded by 12 million population should not be used as a petroleum pipeline. Therefore reliable, safe, sustainable and environmentally concious ways should be sought which simply call for employment of pipelines. Being a secure and stable transit country and taking advantage of its geographical location, Turkey has been supporting the realisation of pipeline projects within the east-west energy cooridor, which envisages transportation of hydrocarbons to be produced in the caspian region via safe, cost effective, and environmentally conscious way to the world markets.

We believe that pipelines will;

- Strengthen the independence and prosperity of the new caspian states by ensuring the free flow of hydrocarbons to the world market,

- Encourage market economy and democratic developments,

- Stabilise the region by building the economic linkages between the countries,

- Help to diversify and secure the energy supply of Turkey and our partners.

Baku-Tbilisi-Ceyhan (BTC) main export crude oil pipeline and the Baku-Tbilisi-Erzurum (BTC) natural gas pipeline projects are the two being projects of the east-west energy corridor.The progress achieved till now with the Baku-Tbilisi-Ceyhan crude oil pipeline project, which is the one of the biggest energy projects of the 21. Century gives us a happiness and real confidence.

We welcome the recent official negotiations initiated between Azerbaijan and Kazakhstan regarding the delivery of the part of Kazakh oil via the BTC project in the near future.

Moving onto gas, delivery of Azeri gas to Turkey is not only important for the Turkish internal gas market, but also for the delivery of this gas to the European markets via Turkey and is considered as the second leg of the East West Energy Corridor.

The Baku-Tbilisi-Erzurum (BTE) or widely known as the South Caucasus natural gas pipeline project, which as you may recall, was sanctioned on february 27th. 2003 and envisaged to be operational due 2006.

We're dedicated to meet at least certain portion of non-contracted volumes of European gas demand in the upcoming years, via Turkey. For this purpose, we have it in mind that to establish a firm and preferable source alternative; we have to present reasonable conditions for gas transmission to europe. This is not only valid for the demanding markets located in the west but also for the supply countries in the caspian region, middle east and likely others.

To achieve this goal, it is quite noteworthy to mention here that Turkey-Greece (agreement signed between the Republic of Turkey and the Hellenic Republic on February 23, 2003) natural gas interconnector project would open the first gate for any gas to be pooled into Turkey with final destination to Europe. As you may appreciate, this project is also backed by the EU commission both conceptually and economically.

Thus, there is done next very important stage for realization of the South European gas transportation ring project.