Sweeping energy agenda and construction frenzy mark bumpy Turkish economy in 2014
ISTANBUL-ANKARA-KONYADeals regarding Iraqi oil were some of the most significant developments in the last year for Turkey's economy.
The government of Iraq and the Kurdish Regional Government (KRG) region began implementing a deal in November under which Baghdad resumed funding for Kurdish civil servant salaries in return for a share of Kurdish oil exports. The deal aims to reduce friction between Baghdad and Kurdish authorities as they face a common threat from Islamic State in Iraq and the Levant (ISIL) insurgents who have seized large parts of the north and west of the country.
Under the agreement reached, Kurdish authorities committed to pumping 150,000 barrels per day of oil, around half their overall shipments, to Iraqi government export tanks in the Turkish port of Ceyhan.
Baghdad agreed to pay $500 million toward Kurdish salaries.
The KRG began pumping oil to State Oil Marketing Organization (SOMO) tanks at Ceyhan. Turkey and the KRG signed a multi-billion-dollar energy package in November that will help transform the semi-autonomous region into an oil and gas powerhouse but infuriate the central government in Baghdad.
Iraq plans to boost its crude production to 4 million barrels a day (bpd) next year, Reuters reported. KRG Energy Minister Ashti Hawrami told a conference in London on Dec. 17, 2014, that the pipeline to Turkey could carry 800,000 bpd next year, including 550,000 bpd to be marketed by Baghdad under a first-stage deal reached earlier this month.
Turkey is subsequently expected to make new deals with new companies, which will be of great importance to Iraqi oil, Energy Minister Taner Yıldız said at the launch meeting of the World Energy Outlook 2014 report of the International Energy Agency (IEA) on Dec. 21.
Yıldız said more than 28 million barrels of oil in 35 tanks had been transferred through the port by the end of November.
Major deals for TANAP, power plants
Turkey signed deals in May to increase its stakes in the pipeline and the Shah Deniz projects, with a ceremony attended by Prime Minister Recep Tayyip Erdoğan, marking another step toward its long-lasting dream of becoming an energy hub.
The Turkish Petroleum Corporation (TPAO) has acquired a 10 percent share from French energy giant Total and raised its total share in the consortium operating Shah Deniz gas field. Yıldız said TPAO would pay $1.45 billion to Total to raise its share from 9 to 19 percent.
Turkish pipeline company BOTAŞ inked a separate agreement with Azeri state-owned energy company SOCAR, increasing its share from 20 to 30 percent.
The Shah Deniz field in the Caspian Sea, one of the world’s largest gas fields, feeds the South Caucasus Pipeline (also known as the Baku-Tbilisi-Erzurum Pipeline) and TANAP, which is slated to carry Azeri gas both to Turkey and to other markets in Europe.
On Dec. 1, Russia scrapped the South Stream pipeline project to supply gas to southern Europe without crossing Ukraine, citing EU objections, and instead named Turkey as its preferred partner for an alternative pipeline, with a promise of hefty discounts.
Many privatizations were made in major power plants, like those in Yatağan, Yeniköy and Kemerköy, too.
Turkey assumes G-20 presidency
Turkey took over the presidency of the G-20 group of major economies for the first time in its history on Dec. 1, vowing to fight global inequality during its turn at the helm.
“Three words will guide Turkey ... inclusiveness, implementation and investment,” Deputy Prime Minister Ali Babacan told a press conference in Ankara on Dec. 1.
“We aim to make the G20 reach out to low income countries and take care of countries that are not G20 members in an inclusive way,” Babacan said.
“Turkey will bridge the gap between developed economies and undeveloped countries to fight global inequality,” he added, while also pledging to include poor countries in the decision-making process.
The 2015 G-20 Summit in November is set to be held in the Mediterranean province of Antalya. The countries plan to discuss topics including “strong, sustainable and balanced economic growth,” climate change, global development and the fight against corruption.
New high-speed train link launched to Anatolia
A new high-speed train link from Istanbul to the Central Anatolian province of Konya was launched on Dec. 17, 2013 and will cut travel times by nearly nine hours.
Konya, with its population of over 1 million, is a key economic hub in central Turkey.
The Istanbul-Konya travel time on the high speed line is four hours and 15 minutes, compared to 13 hours on the previous system.
In July 2014 the first high-speed train line between Istanbul and Ankara, which cut travel time in half to three and a half hours, was launched. A high-speed line between Ankara and Konya is currently in service.
Turkey plans to invest 8.5 billion Turkish Liras ($3.6 billion) in 2015 in railway development projects, Transport Minister Lütfi Elvan has said.
He also announced that tenders for building a new ultra-high speed line between Istanbul and Ankara will be launched next year. The new line will be completed by 2019 and will reduce travel time to just one hour and 10 minutes.
750 drilling operations made at 3rd airport construction site
Over 750 drilling operations have been performed at the construction site of Istanbul’s third airport, which is being built on marshlands north of the city.
“We know the airport is being built on a marshland. Construction companies are performing the required drilling activities with the world’s leading experts,” Transport Minister Lütfi Elvan said during his visit to the construction site on Dec. 26.
He said more than 750 drilling operations have been made at the site and main construction of the airport will begin after the drilling activities have been completed.
More than 30,000 workers will take part in building the airport and around 120,000 new jobs will be created at the airport after it is fully completed, he said.
“Over 150 airline companies will benefit from the airport, which will have international green certificates,” he noted.
Meanwhile, the planned altitude level of the third airport was claimed to have decreased to 70 meters from 105 meters.
The Cengiz-Kolin-Limak-Mapa-Kalyon Consortium, a joint venture of Turkish companies, won the construction tender in May 2013, promising to pay the state 22.1 billion euros (plus taxes) for 25 years, beginning in 2017.
Istanbul’s third bridge to be opened in October
Felling of trees in Istanbul's northern forests for the construction drew ire of environmentalists.
The construction of Istanbul’s third bridge over the Bosphorus continued in 2014 and the bridge is planned to be opened in October 2015.
The towers of the third bridge have reached 312 meters in height, with 10 meters still left to be completed, Transport Minister Lütfi Elvan said to the Anadolu Agency’s Editor Desk on Dec. 22.
The bridge, most likely to be named the Yavuz Sultan Selim Bridge, will open on the 86th anniversary of the founding of the Turkish Republic.
The ICA-İçtaş-Astaldi consortium is building the bridge and the Northern Marmara Highway that will connect to the bridge.
Three workers were killed and another eight workers were injured last April after falling 50 meters, while constructing a viaduct for a highway that will connect to the city’s disputed new bridge over the Bosphorus.
An expert examination into the death of the three workers cited a lack of safety equipment as a key cause, citing 11 responsible senior managers and supervisors.
Volatility in Turkish Lira
The lira hit a record low value against the dollar on Jan. 27, despite heavy central bank intervention in the foreign exchange market. The lira tumbled to 2.36 to the dollar and 3.23 to the euro. The fall of the lira is rooted in an escalating political crisis over the corruption scandal, as well as concerns about the economy, which is also under pressure amid the expected tapering decision of the Fed.
The lira hit a new record low on Dec. 16 as investors moved out of emerging markets amid the collapse of the Russian ruble and fretted over the impact of recent raids against Turkish media. The lira hit a record low of 2.41 lira to the dollar. It subsequently recovered a little to trade at 2.37 lira to the dollar.
Turkish food company buys British giant
Turkey’s largest food group Yıldız Holding bought UK-based cookies and snacks maker United Biscuits, in a $3.2 billion deal it said made it the world’s third-largest biscuit maker and would help it expand into new markets.