CAPITAL: Ankara

MONETARY UNIT: Lira

REFINING CAPACITY: 688,095 b/cd

OIL PRODUCTION: 64,000 b/d

OIL RESERVES: 317 million bbl

GAS RESERVES: 331 bcf

Turkey`s privatization program experienced ups and downs in 1998.

Late in the year the government delayed its state asset sales program until 1999 and almost halved its $12 billion target, citing global financial problems.

Among the postponed sales were four petroleum refining units belonging to Tupras Turkiye Petrol Rafinerileri AS, and two production units of Petkim Petrokimya Holding AS, a petrochemicals producer.

Control of the country`s largest gasoline retailer, Petrol Ofisi AS, apparently was to be sold for $1.15 billion.

Turkey`s Privatization Administration invited Dogus Holding and Turkiye Garanti Bankasi AS to buy 51% of Petrol Ofisi, the nation`s largest petroleum retailer.

Earlier in the year, the Privatization Council had decided to sell a 51% stake of Petrol Ofisi to another group of companies. But the $1.16 billion sale was blocked by a lawsuit, and the winning bidders then withdrew their offer.

Earlier in the year, the Council of State, Turkey`s top administrative court, rejected a bid to annul a 14-year-old law designed to enable energy privatizations.

Also in 1998, Turkey set a petroleum products pricing system necessary for energy sector privatization. The Automatic Pricing Mechanism partially relaxed prices and ended a state subsidy to refineries of about $40/metric ton. It removed several taxes and duties on petroleum prices and imposed a single tax called the fuel consumption tax.

Transportation

Turkey was pushing to get export pipelines from the Caspian Sea nations built across its lands.

Iran, Turkey, and the former Soviet republic of Turkmenistan told Royal Dutch/Shell to draft plans for a $1.6 billion gas pipeline across their territories.

The proposed pipeline would carry up to 30 billion cu m/year of Turkmen gas via Iran to Turkey. The pipeline would be around 940 miles long.

Russia and Turkey signed a $20 billion deal for Turkey`s purchase of gas over a 25-year period. The gas would be delivered to Ankara via a 750-mile line, a third of which would cross the Black Sea. Cost would be $3 billion.

Deliveries would begin in 2000 at 3 billion cu m/year and reach 16 billion cu m/year by 2010.

Turkey planned to limit oil-tanker traffic through Istanbul`s Bosporus waterway, increasing pressure on international oil concerns to build a pipeline through Turkey for future Caspian Sea exports.

The government favored a line which would end at Ceyhan on the Mediterranean, already a terminal for export pipelines from Iraq.

Turkey complained 50,000 ships/year passed through the Bosporus straits connecting the Black Sea to the Marmara Sea and the Mediterranean. About 60% were tankers, carrying 130,000 tons/day west from the Black Sea.

The tankers pass only a few hundred yards from Istanbul, a city of 10 million inhabitants. About 500,000 residents cross the waterway by ferry daily.

Under the proposed rules, all vessels would be required to use a tugboat and to have liability insurance. Restrictions were also planned on the age of vessels using the waterway, as well as on tonnage.

Processing activity

Royal/Dutch Shell Group was trying to sell its Turkish gas stations and its 27% stake in the Atas refinery in the southern city of Mersin for about $300 million.

Turpas Turkiye Petrol Rafinerileri AS, Turkey`s largest refiner, planned to invest $603 million in six projects by 2002 in order to produce fuels meeting European Union standards.

The firm let a $160 million contract for continuous catalytic reforming and isomerization units and related facilities at its Izir refinery in Turkey. Completion was set for late in 2000.

Turkish Electricity Generation & Transmission Corp. approved an energy sales agreement with a combine of InterGen, Boston, and Istanbul-based construction firm Enka.

The combine was building three combined-cycle, gas-fired plants: a 1,400-MW plant at Izmit, a 1,400-MW plant at Gebze, and a 700-MW plant at Adapazari. InterGen was a 50-50 venture of Bechtel Enterprises Inc. and Shell Generating Ltd.

The plants were to be the first to be built under the country`s program allowing firms to build, own, and operate electric plants.