Turkey - Gas Sector Development Project

Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB1468 Project Name GAS SECTOR DEVELOPMENT Region EUROPE AND CENTRAL ASIA Sector Oil and gas (100%) Project ID P093765 Borrower(s) BOTAS, TURKEY Implementing Agency BOTAS Bilkent Plaza, 4. Cadde A-1 Blok, Bilkent Turkey 06530 Tel: +90 312 297 2295 Fax: +90 312 266 0619 Environment Category [X] A [] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared March 18, 2005 Estimated Date of Appraisal Authorization September 12, 2005 Estimated Date of Board Approval December 13, 2005 1. Key development issues and rationale for Bank involvement Background: Turkey, with a population of 70 million and a rapidly growing economy, has had one of the fastest growing gas markets in the world in the past decade. Moreover, as shown in table 1, the growth of demand for gas has not been significantly affected by its three economic crises. There is also a substantial unrealized potential for gas demand, given the relatively low share of gas in its TPES (Total Primary Energy Supply) in Turkey, about 18% in 2001, which is well below the European average of 23% and significantly lower than in the Netherlands (40%), the United Kingdom (39%) and Italy (33%). Table 1 Growth in GDP and Gas Consumption in Turkey Year GDP growth rate (%) a Gas consumption (bcm) Growth in gas consumption (%) 1991 0.3 4.097 22 1992 6.4 4.461 8.9 1993 8.1 4.975 11.5 1994 -6.1 5.377 8 1995 8.0 6.859 27.6 1996 7.1 8.041 17.2 1997 8.3 9.874 22.8 1998 3.9 10.383 5.2 1999 -6.1 12.657 21.9 2000 6.3 14.975 18.3 2001 -9.5 16.368 9.3 2002 7.8 17.624 7.7 2003 5.8 21.182 20.2 Source: State Statistics Institute (DIE) Page 2 The key development and strategic issues faced by Turkey