With its hefty energy import bill and high inflation, Turkey is an obvious winner from the drop in oil prices, which economists expect to help improve its current account deficit. But will other troubles neutralize the benefit of lower oil prices?
The country’s energy import bill last year of about $50 bn – roughly equivalent to the size of its 12-month running current account deficit – puts Turkey firmly on the right side of the slide in oil prices, which have declined 25 per cent from this year’s peak in June.
But Turkey’s dependence on foreign capital, which makes it particularly sensitive to changes in global liquidity, could offset this advantage. This dependence led Morgan Stanley to put Turkey in its “fragile five” last year. Read more
Arguably the announcement last week by Abu Dhabi state energy company Taqa that it would postpone a final decision on investing in developing new coal fired power plant in Turkey to next year, was less surprising than the response to the announcement from Turkish energy minister Taner Yildiz.
Commenting on the decision Yildiz expressed his hope that the decision had not been made for political reasons, pointing to the ongoing instability in Egypt and Syria. Read more
If hope and effort expended translated automatically into oil and gas reserves, Turkey would have been self sufficient years ago.
Sadly geology has decreed that thus far what reserves have been identified in Turkey have been small and confined to the far south east and North West of the country. Read more
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. Read more
Factoid: more oil wells are being drilled by Turkey than by Norway. That’s the perhaps startling news in a Bloomberg story under the headline Turkey Beating Norway as Biggest Regional Oil Driller.
Hang on a bit. Norway, according to the US Energy Information Administration, is the world’s 14th biggest oil producer, with output of 2m barrels a day. The EIA puts Turkey in 60th place, with output of 56,533 barrels a day in 2011. Norway exports more than 80 per cent of the oil it produces. Turkey imports more than 90 per cent of the oil it consumes. Read more
The recent successful sales of three of Turkey’s 21 regional power distribution companies was good news for Turkey’s privatisation programme and its long stalled plans to liberalise its energy markets.
However news on Friday that the sale of a state coal fired power plant had attracted no less than 16 bidders promises to ensure that 2013 should be the year when Turkey finalises the move from a heavily state-controlled power market to a fully liberalised one. Read more
It is not every day that one of the world’s industrial giants sets up shop with one of the titans of a big, dynamic economy, so Eon‘s proposed joint venture with Sabanci Holding of Turkey has caused quite a stir.
Eon is taking a fifty per cent stake in Enerjisa, the energy group half-owned by Turkey’s Sabanci Holding, replacing Austria’s Verbund, which previously held the shares and which is exchanging its holdings for full ownership of eight Bavarian hydro-electric power stations. Read more
News that Turkey’s Privatisation Authority has postponed the deadline for final bids in the sale of the 1,120 MW Hamitabat power plant from November to January 14 has come as little surprise.
The deadline has already been postponed once, from October 15 and the tender itself is the second attempt to sell the plant, the first having been postponed earlier this year after eliciting only a single bid. Read more