BOTAŞ as a 38 year experienced player and projects

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1 Slide 1 Energy Charter Secretariat Stakeholder Event on Gas Transit and Cross-Border Cooperation 19 June 2012 Brussels BOTAŞ as a 38 year experienced player and projects Hülya AKTAN Foreign Relations and EU Coordination Manager Strategy Development and International Projects Department

2 Slide 2 CRUDE OIL PIPELINES IN TURKEY BULGARIA GREECE Edirne Çanakkale Kırklareli İstanbul Bursa BOTAŞ was founded in August 1974 in order to transport Iraqi crude oil to World markets via the Kirkuk-Ceyhan Crude Oil Pipeline. Sakarya Eskişehir Zonguldak Bartın Ankara Yozgat Kırıkkale Samsun Amasya Sivas Ordu Gümüşhane Trabzon Erzincan Bayburt Artvin C Erzurum GEORGIA Ardahan Kars Horasan ARMENIA Aliağa Afyon İzmir Turgutlu Kırşehir Kayseri Nevşehir Malatya Konya Aksaray Adıyaman Kahramanmaraş Muğla Karaman Gaziantep Şanlıurfa Antalya Ceyhan İskenderun 3400 kms of Crude Oil Pipeline E SYRIA D Şelmo Batman Diyarbakır B F Mardin A Şırnak IRAQ IRAN A : I. KERKUK-CEYHAN CRUDE OIL PL 40" 641 KM B : II. KERKUK-CEYHAN CRUDE OIL PL 46" 656 KM 71 MTA CAPACITY C : BAKU TBILISI CEYHAN CRUDE OIL PL 30"-42" KM 50 MTA CAPACITY D : BATMAN-DORTYOL CRUDE OIL PL KM 4.5 MTA CAPACITY E : CEYHAN-KIRIKKALE CRUDE OIL PL 24" 448 KM 7.2 MTA CAPACITY F : SELMO-BATMAN CRUDE OIL PL 6"-9 5/8"-12" 41 KM 0.8 MTA CAPACITY

3 Slide 3 NATURAL GAS IMPORTS 10 BCM Russian Fed (West I- 6 BCM+ West II- 4 BCM) Azerbaijan Russian Fed (Blue Stream) 16 BCM 6.6 BCM Turkmenistan 16 BCM 5.2 BCM LNG (Algeria + Nigeria) 33 billion Cm3 imported by billion Cm3 imported by BCM Egypt 10 BCM 10 BCM Iran Iraq Existing Imports (Plateau Period) Planned/Hanging Gas Contracts

4 Slide 4 BOTAŞ : Natural Gas Supply and Export Pipelines Since 1987 BOTAŞ has expanded its original mission of transporting crude oil via pipelines to cover the natural gas transportation and trade activities, In 1995, the company was restructured as a State Economic Enterprise (SEE) considering the company's task at present and in the future 1986 Gazpromexport-Botaş 6 bcm Start up: Gazpromexport-Botaş 8 bcm Start up: 1998 Ammended partially betw and CQ 4 bcm RF WEST ITG 1997 Gazpromexport-Botaş 16 bcm Start up: 2003 RF BLUE STREAM ŞAH DENİZ AZERBAIJAN GAS 2001 AGSC-Botaş 6,6 bcm Start up: Botaş-Depa 750 mcm Start up: 2007 ALGERIAN LNG NIGERIAN LNG 1996 NIGC-Botaş 10 bcm Start up: 2001 IRANIAN GAS 1988 Sonatrach-Botaş 4.4 bcm Start up: NLNG-Botaş 1,3 bcm Start up: Turkmenistan 16 bcm +14 bcm

5 Slide 5 MARKET SRTUCTURE BEFORE LIBERALISATION BOTAŞ DOMESTIC PRODUCER / IMPORTER IMPORTER/ TRANSMISSION/ WHOSALE/ DISTRIBUTION/ STORAGE RESIDENTIAL CUSTOMERS INDUSTRIAL CUSTOMERS POWER GENERATORS DISTRIBUTION Monopoly rights of BOTAS on natural gas import, distribution, sales and pricing under the Decree No. 397 have been abolished by the natural Gas Market Law No 4646 that was enacted on May BOTAS, having thirtyseigth years experience in the business, steps further and accelerates the studies on re-structuring liberalized natural gas market in the country.

6 Slide 6 MARKET SRTUCTURE AFTER LIBERALISATION SUPPLY IMPORTER LOCAL PRODUCER T WHOLESALE R DISTRIBUTION EXPORT A N EXPORTER S M I S WHOSALE S ELIGIBLE CUSTOMERS I O N STORAGE C O M P A N Y DISTRIBUTION END USERS NON-ELIGIBLE CUSTOMERS

7 Slide 7 STRATEGY DEVELOPMENT : ENERGY CORRIDOR KAZAKİSTAN RUSYA FEDERASYONU KARADENİZ TÜRKİYE GÜRCİSTAN HAZAR DENİZİ ~70% of World ERMENİSTAN AZERBAYCAN Oil&Gas Reserves Region TÜRKMENİSTAN ÖZBEKİSTAN AKDENİZ SURİYE IRAK İRAN AFGANİSTAN 180

8 Slide 8 MAIN IDEA AND TARGETS OF THE DEVELOPED PROJECTS TRADE AND TRANSIT ACCESS TO CHEAPER GAS ENHANCED SECURITY OF SUPPLY Cost-based transmission tariffs Use of existing infrastructure and idle capacities to the extent possible Partial exemption from TPA for trading of excess volumes Removal of final destination clauses Some kind of netback price mechanism for domestic consumption Balanced diversification of supplies Underground storage capacities to serve both domestic market and end consumers in Euope

9 Slide 9 BOTAŞ Projects: Turkey as an Energy Center NABUCCO TAP RUSSIAN GAS BLUE STREAM I BLUE STREAM II NABUCCO TRANS- CASPIAN KAZAKH GAS ITB TRANS-CASPIAN ITGI ITG TANAP SHAH SEA AZERBAIJAN GAS TURKMEN GAS ALGERIAN LNG CEYHAN LNG IRAQ GAS (ITGEP) IRANIAN GAS NIGERIAN LNG EGYPTIAN GAS ARAB GAS P/L NABUCCO

10 Slide 10 MAIN EXPECTATIONS FROM RULES OF CROSS-BORDER TRADE AND TRANSIT Rules should be fully compatiable with the provisions of Treaty, especially with Article 2: Purpose that says:...this Treaty establishes a legal framework in order to promote long-term cooperation in the energy field, based on complementarities and mutual benefits, in accordance with the objectives and principles of the Charter... Rules should be a magic key to install win-win-win principle for all parties and should not be magic key for the positive discrimination of some parties or players. The priorities should be defined with the mutual agreement of all parties, it shouldn t be drafted acoording to the pre-considerated priorities. The main objective and priority should be the SECURITY OF SUPPLY for all parties especially for the transit countries A secure, adequate, affordable and reliable supply of energy is necessary precondition for development. Promoting dialogue and cooperation is a vital issue. Cooperative actions based on win-win-win approach may provide a more effective energy sector by voluntary contributions.

11 Slide 11 THANK YOU VERY MUCH FOR YOUR ATTENTION