CAPITAL: Ankara

MONETARY UNIT: Lira

REFINING CAPACITY: 690,915 b/cd

OIL PRODUCTION: 61,740 b/d

OIL RESERVES: 298.6 million bbl

GAS RESERVES: 314 bcf

Turkey suffered major damage to oil facilities in an Aug. 17, 1999, earthquake.

Hardest hit was the 226,000 b/d Tupras Turkiye Petrol Rafinerileri AS refinery at Izmit.

The refinery suffered a major fire after the earthquake, sustaining about $200 million in damage, mostly to tanks.The plant, which had supplied about a third of Turkey`s products demand, resumed full production later in the year.

It was designed to withstand an earthquake measuring 9 on the Richter scale but was near the epicenter of a shock that registered 7.8. A tower collapsed, and seven tanks caught fire.

It took 4 days to extinguish the blazes, which rocked Izmit with explosions and filled the air with dense smoke. Firefighting planes bombarded the flames with water and fire-retardant chemicals but made little progress until the fire burned itself out.

Pipe ruptures at the plant spilled hydrocarbons into the sea, polluting about 750,000 sq m.

The plant was the largest of Tupras`s four refineries. Other units shifted to full capacity to meet demand, and product imports were increased.

The earthquake was a setback for the state Privatization Administration, which owned 96.4% of Tupras.

After the quake, Turkey postponed the public tenders for several Tupras refineries and other businesses until early 2000.

Marketing sale

Turkey planned to sell 51% of Petrol Ofisi AS, the state-run gasoline distributor, in 2000.

Companies submitting acceptable bids were due to participate in an auction, after which Turkey`s antitrust body and the Privatization Administration would approve the high bidder.

Turkey tried to sell the company for $1.16 billion in 1998, but the deal was canceled because of corruption charges.

In the second sale, Turkey offered easier terms to speed a sale.

The buyer of the 51% stake would have to pay 30-35% of the sale price up front and would have 4-5 years to pay the rest. That compared with a 50% down payment and 2-year installments in previous asset sales.

The Petrol Ofisi offering was Turkey`s largest asset sale and was expected to generate up to $2 billion.

A 20% stake in refiner Tupras Turkiye Petrol Rafinerileri AS was at the top of the asset sale agenda for 2000.

Meanwhile, petroleum retailers Turcas and Tabas said they would merge operations to cut costs.

Tabas Petrolculuk AS already owned 82% of Turcas Petrolculuk AS.

Petrol Ofisi had 47% of the market. Turcas was fourth largest with 6.4% and Tabas eighth with 1%.

OIL pipeline

Leaders of Turkey, Azerbaijan, Georgia, and Turkmenistan signed agreements in November 1999 aimed at building oil and gas export pipelines from the Caspian region at a cost of more than $5.2 billion.

One of the projects, a 1,994-km, $2.5 billion pipeline, would carry crude oil from Baku in Azerbaijan to the Turkish Mediterranean port of Ceyhan.

The second, the Trans-Caspian gas pipeline, was a $2.7 billion project to carry gas from Turkmenistan to Turkey. The PSG International consortium, including Shell Oil Co., General Electric Co., and Bechtel Group, had a joint venture to construct the line.

The US pushed for the oil line as an alternative to exports through Russia or Iran.

The oil line agreement set specifications such as licensing, security, and land grants, and a Turkish guarantee to finance $1.7 billion for the part of the pipeline traversing Turkey.

Each host country agreed to let the pipelines cross their territories, subject to parliamentary ratification.

OIL companies were due to pledge in 2000 how much oil they would ship through the line. Construction was due to be completed in 2004.

GAS projects

Blue Stream Pipeline Co. BV, a 50-50 joint venture of Russian gas giant Gazprom and Italian state energy company ENI SPA, let a contract valued at about $1.7 billion for construction of the offshore section of the proposed Blue Stream pipeline across the Black Sea.

Blue Stream would transport 16 billion cu m/year of Russian gas to Turkey via two 380-km subsea pipelines traversing the Black Sea at a maximum water depth of 2,150 m. Total cost was $3 billion.

First gas delivery was slated for 2001, after the first line was laid. Construction of both lines was to be completed in 2002.

Gazprom and Turkish state pipeline firm Botas would build and operate the respective Russian and Turkish onshore sections of the Blue Stream system.

The US and Azerbaijan criticized the project because it would compete for the same market as the gas pipeline from the Caspian Sea. Turkey said it could absorb the gas from both.

Meanwhile, Botas agreed to buy 2.4 billion cu m of liquefied natural gas over 2 years from Nigerian Liquefied Natural Gas Co.`s LNG project for $260 million.

Turkey and Iran continued to build a gas pipeline linking their nations.

Through it, Turkey would buy 3 billion cu m/year. The line, from Iran`s Tabriz to Turkey`s Ankara, was due completion in 2001.

A joint venture planned to build facilities in 2 years to liquify and transport 1.2 million tonnes/year of Russian LNG to the Turkish Black Sea port of Batumi.

Sponsors were Conoco Adjgas LLC, a joint venture of Conoco Inc., Adjar Gas, and Turkish firm Erdal Aksoy.