Turkey - Gas Sector Development Project

Page 1 INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: AC1499 Date ISDS Prepared/Updated: 07/12/2005 I. BASIC INFORMATION A. Basic Project Data Country: Turkey Project ID: P093765 Project Name: GAS SECTOR DEVELOPMENT Task Team Leader: Ranjit J. Lamech Estimated Appraisal Date: September 19, 2005 Estimated Board Date: December 13, 2005 Managing Unit: ECSIE Lending Instrument: Specific Investment Loan Sector: Oil and gas (100%) Theme: Public expenditure, financial management and procurement (P) IBRD Amount (US$m.): 300.00 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: BORROWER 100.00 100.00 B. Project Objectives [from section 2 of PCN] To increase the reliability and stability of gas supply and delivery to Turkish gas consumers by implementing critically needed gas storage and network infrastructure, and support BOTAS in strengthening its operation as a commercially run and financially independent corporation capable of accessing capital markets on its own account. C. Project Description [from section 3 of PCN] Tuz Golu Underground Gas Storage Facility: This is the main component and will include the surface facilities, the solution mining and cavern formation work, the water pipeline and the gas pipeline, the cushion gas, as well as consulting services such as the owner's engineer. This storage facility is estimated to have a capacity of 960 million cubic meters of working gas (i.e. 0.96 BCM). [Notes: In addition to the working gas, there will be 240 million cubic meters of cushion gas, required for cavern integrity throughout the operating life of the facility. The Gas Market Law (4646) requires every trader/wholesaler of gas to maintain a minimum of 10% of their forecast demand in in-country storage. This translates to a storage requirement of about 3.5 to 4.0 BCM by 2008.] Page 2 The facility will be built in an underground salt formation that runs south of the Tuz Golu salt lake - the salt body has an average width of 2-2.5 km, is about 15 km long, and has an average salt thickness of 1,500 meters (exceeding 2,000 meters in several places). Geological screening has ranked Tuz Golu as the preferred location for storing large volumes of gas. The caverns will be 'solution mined' using fresh water drawn from the Hirfanli reservoir through a 130 km pipeline. The fresh water demand is about 10-12 million cubic meters per year for six years. DSI (the State Water Board) has agreed to allocate this water which represents less than 0.5% of water inflow to the reservoir. The proposed salt caverns are about 20 km from a main gas trunk line near Aksaray making connection to the network easy. The brine from the solution mining will be discharged into an area of the Tuz Golu salt lake where there are no plant or animal life of any special interest. The brine will also help preserve the lake which is evaporating. Potential Investment in Gas Transmission and Network Infrastructure: In order to meet the growing demand for gas, BOTAS has planned a very large transmission development program, for which they will require financing. The Project may also finance critically needed compressor stations, depending on the consistency between the schedule of the Project and the preparedness of the proposed investments. Achieving an Investment Grade Credit Rating and Corporate Financial Independence: The Project will support BOTAS in strengthening its institutional capacity to enable it to achieve an investment grade credit rating that will enable it to access capital markets on its own account. The Bank is providing support, through a PPIAF grant, for financial advisors and rating services from one of the top three international credit rating firms. During project preparation, the scope of follow-on support during project implementation will be determined. D. Project location (if known) The Gas Storage Project would be located South of the Tuz Golu salt lake in Turkey. E. Borrower