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Energy Sector Turkey

January 2014



Table of Contents

I. Sector Overview

1. Sector Highlights

2. Main Indicators

3. Electricity Generation Sector Main Indicators

4. Electricity Generation Forecast

5. Electricity Demand Forecast

6. Planned Projects

7. Electricity Generation Forecast

8. Government Policy

II. Power Generation

1. Installed Capacity by Enterprises and Resources

2. Privatisation of Power Generation Assets

3. Nuclear Energy Projects

III. Green Energy

1. Green Energy Highlights

2. Green Energy Installed Capacity

3. Green Energy Potential

IV. Electricity Distribution

1. Regional Electricity Distribution Privatisation

2. Regional Electricity Distribution Privatisation (cont’d)

V. Oil and Gas

1. Oil and Gas Highlights

2. Oil and Gas Indicators and Forecasts

3. Natural Gas Consumption

4. Natural Gas Imports

5. Regional Gas Distribution

6. Pipeline Projects

VI.M&A and Latest Developments

1. Top 20 M&A Deals in Energy Sector 2012-2013

2. Top 20 M&A Deals in Energy Sector 2012-2013 (cont’d)

3. Latest Developments

VII.Main Players

1. Elektrik Üretim A.Ş. (EÜAŞ)

2. Elektrik Üretim A.Ş. (EÜAŞ) (cont’d)

3. TÜRKİYE PETROL RAFİNERİLERİ A.Ş. (TÜPRAŞ)

4. TÜRKİYE PETROL RAFİNERİLERİ A.Ş. (TÜPRAŞ) (cont’d)

5. İstanbul Gaz Dağıtım Sanayi ve Ticaret A.Ş (İGDAŞ)

6. İstanbul Gaz Dağıtım Sanayi ve Ticaret A.Ş (İGDAŞ) (cont’d)

7. Türkiye Petrolleri Anonim Ortaklığı (TPAO)

8. Türkiye Petrolleri Anonim Ortaklığı (TPAO) (cont‘d)



I. Sector Overview



Sector Highlights

In the last decade, Turkey introduced legislation to liberalise and restructure its energy sector, following a policy aimed at raising its efficiency and

adding new capacity to meet the growing demand. Turkish energy consumption has been steadily rising on the back of country's robust economic

growth and rising population. Electricity consumption grew by 1.3% to 245,484 GWh in 2013, after rising by over 5.0% in the previous year. In the

medium term, power demand is projected to continue growing at an average rate of 7% annually.

Liberalisation

Privatisation

Local primary resources meet only 28% of the Turkey energy demand. In order to reduce its energy imports bill and to increase the share of

renewable energy, the government has introduced new legislation aiming to attract many private energy companies and foreign investment in the

sector. Turkey estimates its energy sector requires investment of USD 120-130bn by 2023. A total 222 power plants with nearly 7,000 MW of

installed capacity were launched in 2013. The share of the private sector in installed capacity currently stands at approximately 57%, up from 39%

ten years ago.

In 2013, the country completed the privatisation of regional electricity distribution companies and signed the first deals in the planned privatisation

of the state's large thermal and hydropower plants with a total capacity of more than 16 GW. The government plans to launch a number of large-

scale investment projects, including the construction of nuclear plants. The country is aiming to generate 5% of its total electricity output from

nuclear energy by 2023. In 2010, Turkey and Russia inked a deal to build the first nuclear power plant at Akkuyu, southern Turkey. In 2013, the

country signed an agreement with Japan for the construction of its second nuclear power plant in Sinop, on the Black Sea.

Turkey serves as a bridge between the oil and gas rich Caspian and Middle East countries and the energy-hungry Western European states.

The Turkish government seeks to capitalise on this favourable geographical position by making the country a regional energy hub. In line with this

goal, it is involved in a number of international gas and oil pipeline projects, including Shah Deniz, TANAP and TAP.

Strategic location

Investment needs



Source:

Comments

Main Sector Indicators

The utilities (electricity, gas and water) sector has been expanding at an annual rate of 11-13% in recent years. The utility sector was one of the main

beneficiaries of FDI in the previous years and the government's liberalisation efforts, pending privatisations and the industry's high growth prospects are

expected to drew more investment to the sector.

Turkey energy sector in figures

Turkstat, Turkish Treasury

2008 2009 2010 2011 2012

GDP (TRY mn) 950,534 952,559 1,098,799 1,297,713 1,416,817

GDP (USD mn) 730,337 614,554 731,608 773,980 786,293

GDP real growth (%) 0.7 -4.8 9.2 8.8 2.2

Electricity, gas and water supply (TRY mn) 20,638 22,818 25,455 28,768 32,486

Electricity, gas and water supply growth rate (%) 28 10.6 11.6 13 12.9

Electricity, gas and water supply share in GDP (%) 2.2 2.4 2.3 2.2 2.3

Net foreign direct investment (USD mn) 19,760 8,663 9,036 16,047 13,018

Foreign capital inflow in electricity, gas and water supply sector (USD mn) 107 2,158 1,826 4,246 924



Comments

Source:

Electricity Generation Sector Main Indicators

Generation and consumption Electricity generation by primary resources 2012

EPDK

2008 2009 2010 2011 2012

Installed capacity (MW) 41,817 44,761 49,524 52,911 57,059

Production (GWh) 198,418 194,813 211,207 229,395 239,497

Consumption (GWh) 198,085 194,079 210,434 230,306 242,370

Imports (GWh) 789 812 1,883 4,556 5,827

Exports (GWh) 1,122 1,546 2,675 3,645 2,954

Electricity consumption rose by 5.2% in 2012 compared to 9.4% growth in the previous year. Turkey's state power company Elektrik Uretim AS (EUAS)

and its subsidiaries had a 37.8% share in total electricity generation in 2012 while free market generation accounted for a 30.9% share.

Natural gas remains the main resource in electricity generation. It accounts for between 40% and 50% in recent years.

Natural gas 43.6%

Hydropower 24.2%

Coal 28.0%

Wind 2.5%

Fuel, oil 1.0%

Geothermal, waste, other

0.7%



Source:

Electricity Demand Forecast

High demand power forecast

Low demand power forecast

EPDK

2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f 2021f 2022f

Peak load (MW) 41,000 43,500 46,420 49,370 52,490 55,780 59,260 62,930 66,320 69,880

Peak load Increase (%) 5.0 6.1 6.7 6.4 6.3 6.3 6.2 6.2 5.4 5.4

Electricity demand (GWh) 258,140 278,960 301,300 320,470 340,710 362,100 384,670 408,500 430,510 453,560

Electricity demand growth (%) 6.7 8.1 8.0 6.4 6.3 6.3 6.2 6.2 5.4 5.4

2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f 2021f 2022f

Peak load (MW) 40,250 41,500 42,900 44,570 46,270 48,500 50,900 53,380 55,790 58,230

Peak load Increase (%) 3.1 3.1 3.4 3.9 3.8 4.8 4.9 4.9 4.5 4.4

Electricity demand (GWh) 253,770 265,780 278,160 289,330 300,390 314,850 330,440 346,510 362,130 378,000

Electricity demand growth (%) 4.9 4.7 4.7 4.0 3.8 4.8 5.0 4.9 4.5 4.4



Comments

Source:

Planned Projects

According to Turkey's Energy Market Regulatory Authority (EPDK), there are private and state projects with total capacity of 18,717 MW, which are to be

put into operation by 2017. Of these, 48.5% are thermal power projects and 44.8% are for hydropower plants. Private sector projects for another 25,381

MW have been licensed but their launched date is uncertain.

According to the second forecast scenario of the regulator, projects with installed capacity of 16,832 MW will be put into operation by 2017 and the private

sector has in the pipeline licensed projects for 27,266 MW with uncertain launch date.

Planned projects Installed capacity of planned projects by resource (2013-2017)

EPDK

2013 2014 2015 2016 2017

Private sector

Installed

capacity (MW)

5,351 1,311 5,756 2,124 1,200

Government

sector installed

capacity (MW)

1,510 124 1,200 140 0

Private sector

generation

(GWh)

198,085 194,079 210,434 230,306 242,370

Government

sector

generation

(GWh)

789 812 1,883 4,556 5,827 Thermal 48.5%

Hydropower 44.8%

Wind, other renewables

6.7%



Source:

Electricity Generation Forecast

Electricity generation forecast

BMI

2014 2015 2016 2017 2018

Total generation (TWh) 251.95 267.41 282.1 300.72 315.73

Total generation growth (%) 5.6 5.99 5.64 6.60 4.99

Thermal generation (TWh) 174.88 183.48 193.04 202.04 210.63

Thermal generation growth (%) 4.03 4.92 5.21 4.66 4.25

Coal generation (TWh) 66.27 69.06 72.92 76.34 79.00

Coal generation growth (%) 4 4.2 5.6 4.68 3.49

Natural gas generation (TWh) 105.49 111.29 116.96 122.63 128.62

Natural gas generation growth (%) 4.3 5.5 5.1 4.84 4.89

Oil generation (TWh) 3.12 3.14 3.15 3.07 3.01

Oil generation growth (%) -3.68 0.61 0.42 -2.33 -2.26

Hydropower generation (TWh) 62.71 66.47 68.8 74.99 77.51

Hydropower generation growth (%) 6.5 6 3.5 9.00 3.36

Non-hydropower renewables generation (TWh) 14.36 17.08 20.27 23.69 27.59

Non-hydropower renewables generation growth (%) 23.74 18.93 18.64 16.87 16.49



Source:

Government Policy

Regulators

Objectives

Liberalisation

The Turkish energy market is overseen by the Ministry of Energy and Natural

Resources. General Principals are set by the Electricity Market Law (2001), the

Natural Gas Market Law (2001), the Petroleum Market Law (2003) and the Liquefied

Petroleum Gases (LPG) Market Law (2005). The High Planning Council, supervised

by the Prime Minister, outlines the state policy in the sector.

The main objectives of this policy include decreasing import dependency and providing variety

in source, route and technology. The government aims to achieve several clear targets. These

include developing domestic coal and hydropower potential, increasing total installed wind

power to 20,000 MW, and generation of 5% of total electricity from nuclear power by 2023.

The supervisory and regulatory body of the electricity market is the Energy Market Regulatory

Authority (EPDK), responsible for tariff approvals and the issuance of operation licenses.

As part of the energy sector restructuring process, Turkey introduced three

concession models for energy plants: Build-Operate-Transfer (BOT), Build-Operate

(BO) and Transfer-of-Operating-Rights (TOR). The TOR model was chosen for the

privatisation of some of the country’s regional distribution companies and of 52 small

hydroelectric power plants operated by the state power generation company EUAS.

The government is seeking

to ensure energy supply by

promoting generation from

local sources and nuclear

energy.

BOT, BO and TOR models

are used to attract private

investors in electricity

generation and distribution.

The state monopoly is

retained for transmission

between wholesale and

generation.

Market prices and regulated

tariff approved by EBDK are

both present on the market.

From 2014 companies

consuming more than 4.5

MWh a year can choose

their own supplier.

Legislation for the

establishment of an energy

stock exchange was

adopted in 2013.



II. Power Generation



Source:

Installed Capacity by Enterprises and Resources

Installed capacity by enterprise 2012

A total 43.4% of Turkish electricity generation capacity

is still in the hands of state-owned EUAS and its

affiliates. The share of the private sector is expected to

increase as the government is process of privatising

thermal and hydropower plants with a combined

capacity of over MW 16,000.

Turkey had a total installed capacity of 57,059 MW at

the end of 2012, up from 52,911 MW a year ago. The

installed capacity is estimated to have reached 61,984

MW in October 2013. The hydropower plants have the

largest share in terms of installed capacity, followed by

the natural gas-fired plants and the coal-fired plants.

With the completion of power plants currently under

construction, the share of hydropower plants in total

installed capacity is expected to increase, while the

share of natural gas is expected to decrease.

Installed capacity by resource 2012

EUAS

EUAS 43.4%

TOR and free market

producer 36%

BOO 10.7%

Autoproducers 5.6%

BOT 4.3%

Hydropower 34.4%

Natural gas, LNG 30.1%

Coal 21.7%

Multi-fuelled 6.9%

Wind 4.0%

Fuel, oil 2.4%

Geothermal, waste, other

0.5%



Privatisation of Power Generation Assets

Source: EUAS, Privatisation Administration Any redistribution of this information is strictly prohibited.

Copyright © 2011 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved.

Seyitömer (600 MW) -

(privatised by Celikler

Holding for USD 2.25bn)

Hamitabat (1,165 MW) –

(privatised by Limak

Group for USD 105mn)

Soma A-B (1,034 MW)

Çan (320 MW)

Separately

- 13 -

Elbistan A (1,355 MW)

Elbistan B (1,440 MW)

Portfolio 1

Ambarlı DG (1,351 MW)

Ambarlı Fuel-oil (630 MW)

Portfolio 2

Aliağa (180 MW)

Kangal (457 MW)

(privatised by Konya

Seker- Siyahkalem

Muhendislik for USD

985mn)

Tunçbilek (365 MW)

Çatalağzı (300 MW)

Portfolio 3

Bursa DG (1,432 MW)

Orhaneli (210 MW)

Gökçekaya (278 MW)

Sarıyar (160 MW)

Yenice (38 MW)

Portfolio 4

Kemerköy (630 MW)

Yatağan (630 MW)

Yeniköy (420 MW)

Demirköprü (69 MW)

Adıgüzel (62 MW)

Kemer (48 MW)

Karacaören-1 (32 MW)

Gezende (159 MW)

Portfolio 5

Altınkaya (703 MW)

Derbent (56 MW)

Hirfanlı (128 MW)

Kesikköprü (76 MW)

Kapulukaya (54 MW)

Portfolio 6

Hasan Uğurlu (500 MW)

Suat Uğurlu (69 MW)

Almus (27 MW)

Köklüce (90 MW)

Kılıçkaya (120 MW)

Çamlıgöze (32 MW)

Portfolio 7

Çamlıgöze (32 MW)

Aslantaş (138 MW)

Menzelet (124 MW)

Kısık (10 MW)

Karkamış (189 MW)

Portfolio 8

Doğankent (75 MW)

Kürtün (85 MW)

Tortum (26 MW)

Özlüce (170 MW)

Portfolio 9

Turkey plans to privatise 45 thermal and hydropower plants with total capacity of more than 16 GW. These assets represent 68% of the EUAS group's installed capacity.

Four priority power plants were identified in order to be privatised separately and the remianing assets were initially grouped in nine portfolios. The Privatisation

Administration has however stated that this approach may change taking into account the the developments in the industry and international markets. The country held

tenders for the sale of 17 small hydropower plants in late 2012 and after completing tenders for another 35 small hydropower plants in 2010.



Nuclear Energy Projects

Plans

Turkey wants to have two operational nuclear plants and to start construction of a third one by 2023 under a plan

which envisages nuclear energy to represent 5% of the country's total electricity generation mix. The first nuclear

plant is to be built in Akkuyu, on the Mediterranean coast and the second one is to be located in Sinop, on the Black

Sea coast.

Akkuyu

In May 2010, Turkey and Russia signed a USD 20bn agreement to build four reactors with a total capacity of 4,800 MW in Akkuyu, on the Mediterranean coast. Russia will fully finance the construction fo the plant and initially hold 100% of the project and may sell a 49% stake at a later stage. The construction of the first unit is to start in mid-2015, with commissioning in 2019-2020. The remaining units should be launched by 2023. The plant has been granted a feed-in tariff of USD 0.1235/KWh for two of its four units for 15 years after commissioning, guaranteed by TETAS, Turkey's state power trading company. After the expiry of the 15-year period the Turkish side will receive 20% of the project company’s net profit over the following 45 years.

Sinop

In May 2013, Turkey and Japan signed a deal for the construction of the second Turkish nuclear power plant in

Sinop at an estimated cost of USD 22bn. The 4,800 MW power plant will be built by Japan's Mitsubishi and Itochu

Corporation and France's GDF Suez, using French nuclear group Areva's Atmea type reactors. Turkish state power

generator EUAS will hold a stake of around 35% in the project.

Third N-plant

The consortium, which will build the Sinop nuclear power plant, will also carry out studies for the location of the

third Turkish nuclear plant. Igneada, on the Bulgarian border, is considered to be the preferred location for the third

plant. The country has sufficient uranium resources for the operation of these nuclear power plants.



III. Green Energy



Green Energy Highlights

Legislation

In 2005, the country introduced its first law on Renewable Energy Resources that provided for limited feed-in tariffs.

In 2011, additional feed-in tariff payments for renewable power plants using Turkish-made equipment were

introduced.

Hydro

The total installed capacity of hydropower plants in Turkey reached 21,724 MW at the end of October 2013. The

country has a potential to produce 140 billion of kWh a year. About 41% of it is already being used and power plants,

which will exploit a further 27% of it, currently are under construction.

Wind The installed capacity of operational wind power plants in the country stood at 2,689 MW at the end of October

2013. A total 112 wind power plants with combined installed capacity of 2,613 MW were launched in 2013.

Geothermal

Turkey's geothermal installed capacity stands at 310 MW. Between 2008 and 2012, the country completed tenders

to transfer to private investors 16 geothermal fields suitable for energy generation in addition to 69 tenders for

heating and spa tourism projects. The country is considered to have geothermal potential of 35,500 MW, of which

311 MW can be used for electricity generation.



Source:

Green Energy Installed Capacity

Green energy installed capacity as of Oct 2013

Turkey produced 65.3 million kWh electricity from

renewable sources in 2012, up from 58.2 billion kWh

in 2011.

The country aims to produce 30% of its electricity

from renewable sources by 2023, compared to some

25% in 2011.

Turkey’s green energy installed capacity reached

24,947 MW in October 2013.

Renewable energy plants with total installed capacity

of 3,339 MW went operation only in 2013. Of these,

hydropower plants were with 2,613 MW and wind

parks were with 498 MW of installed capacity. A total

222 power plants with total installed capacity of

6,986 MW were put into operation in 2013.

Installed capacity of power plants launched in 2013

Ministry of Energy and Natural Resources

Hydropower 87.1%

Wind 10.8%

Geothermal, other 2.1%

Thermal 52.2%

Hydropower 37.4%

Wind 7.1%

Geothermal, biomass, other

3.3%



Highlights

Source:

Green Energy Potential

Installed capacity potential by sources

Generation potential by sources

Turkey targets to have 600 MW of installed capacity in

geothermal energy by 2023.

The installed capacity of wind power plants is targeted

to rise to 20,000 MW by 2023.

The installed capacity potential for solar plants is

estimated at 50,000 MW. The country plans to have

installed capacity of 3,000 MW of solar energy by

2023.

By 2023, Turkey plans to have biomass installed

capacity of 2,000 MW, which is the full estimated

potential for this type of renewable energy.

Ministry of Energy and Natural Resources

Hydro 26%

Wind 35% Solar 37%

Biomass 2%

Hydro 63%

Wind 26%

Solar 3%

Biomass 6%

Geothermal 2%



IV. Electricity Distribution



Source:

Comments

Regional Electricity Distribution Privatisation

The privatisation of Anadolu Yakasi, Toroslar, Dicle and Vangolu was completed in 2013. The first two were taken over by Enerjisa, which

increased the number of the electricity distribution companies in its portfolio to three, including Baskent Elektrik.

Polat Insaat was selected as the new operator of Osmangazi Elektrik after Energy Market Regulatory Authority took over the management of

the distribution company from Eti Gumus, which won a previous privatisation tender with a USD 485 bid in 2010.

Regional Electricity Distribution Privatisation

DealWatch

Company Status Date of Announcement Buyer Deal Value, USD mn

Dicle Elektrik Dağıtım A.Ş. Completed March 2013 Iskaya Dogu Ortak Girisim 387

Vangölü Elektrik Dağıtım A.Ş. Completed March 2013 Turkerler Insaat 118

Aras Elektrik Dağıtım A.Ş. Completed Sept 2008 Kiler, Calik Holding 128.5

Çoruh Elektrik Dağıtım A.Ş. Complete Nov 2009 Aksa Elektrik 227

Fırat Elektrik Dağıtım A.Ş. Completed Feb 2010 Aksa Elektrik 230.25

Çamlıbel Elektrik Dağıtım A.Ş. Completed Feb 2010 Kolin Insaat 258.5

Toroslar Elektrik Dağıtım A.Ş. Completed March 2013 Enerjisa 1,725

Meram Elektrik Dağıtım A.Ş. Completed Sept 2008 Alarko Holding 440

Başkent Elektrik Dağıtım A.Ş. Completed July 2008 Enerjisa 1,225



Source:

Regional Electricity Distribution Privatisation (cont’d)

Privatisation of electricity distribution companies

DealWatch

Company Status Date of Announcement Buyer Deal Value, USD mn

Uludağ Elektrik Dağıtım A.Ş. Completed Feb 2010 Limak Insaat 940

Akdeniz Elektrik Dağıtım A.Ş. Completed Nov 2012 Limak-Cengiz-Kolin 546

Gediz Elektrik A.Ş Completed Dec 2012 Elsan-Tumas-Karacay 1,231

Trakya Elektrik Dağıtım A.Ş.. Completed Jan 2012 IC Ictas 575

İstanbul Anadolu Yakası Elektrik

Dağıtım A.Ş. Completed March 2013 Enerjisa 1,227

Sakarya Elektrik Dağıtım A.Ş. Completed July 2008 AkCez 600

Osmangazi Elektrik Dağıtım A.Ş. Announced Nov 2013 Polat Insaat 590

Boğaziçi Elektrik Dağıtım A.Ş.. Completed Dec 2012 Limak-Cengiz-Kolin 1,960

Kayseri Elektrik Dağıtım A.Ş. Completed 1991 Kayseri ve Civarı Elektrik

T.A.Ş. n.a.

Aydem Elektrik Dağıtım A.Ş. Completed Aug 2008 Bereket Enerji 110

Yeşilırmak Elektrik Dağıtım A.Ş Completed Nov 2009 Calik Enerji 441.5



V. Oil and Gas



Oil and Gas Highlights

Demand &

Reserves

Turkey's oil and gas production industry is unable to the meet fast growing demand. Over 98% of natural gas and 91% of crude

oil consumed in 2012 was imported. Turkey's producible oil and gas reserves stand at 295mn barrels and 6.8 bn cub m,

respectively, as of end 2012. Gas is produced in southeastern Anatolia, Thrace and the western Black Sea regions.

Gas Imports

Around 58% of Turkish gas imports in 2012 were met by Russia. Turkey imported 18% of its natural gas from Iran and Azerbaijan accounted for 7%. The country also buys Algerian and Nigerian LNG, which account for 9% and 3%, respectively, of total gas imports. A total 83% of the natural gas was imported by pipelines and the remaining was LNG. Turkey exported 611 mn cub m of natural gas, produced at Azeri project Shah Deniz, to Greece in 2012, down from 714 mn cub m in the previous year.

Liberalisation

The Natural Gas Market Law (2001) removed the state monopoly on gas imports. In 2005 contracts for gas imports of 4 bn cub m from Russia were transferred to four private sector companies. First imports by Shell Enerji started in December 2007, Bosphorus Gaz Corporation, Enerco Enerji and Avrasya Gaz started imports in 2009. The private companies signed agreements to import another 6 bn cub m Russian natural gas annually from the beginning of 2013. The state gas pipeline company Botas accounted for 92.3% of the total Turkish gas imports in 2012.

TPAO

Local natural gas production totalled 632 mn cub m in 2012, down from 759 mn cub m in the previous year. State-owned

Turkish Petroleum Corporation (TPAO) accounted for 52% of the local production, while Thrace Basin Natural Gas contributed

for 26% of the domestically extracted natural gas in 2012. The other companies, active in gas production in Turkey, are Amity

Oil, Tiway Turkey, Petrogas, Temi, PO Arama Uretim and Foinavon.

Oil

In 2013, Iraq was the biggest crude oil exporter to Turkey, with 5.4 million tons and a 32% share in the total Turkish imports. Second came Iran with 4.8 million tons, which in recent years lost its position as the largest oil exporter to Turkey as a result of the stricter sanctions. In 2003 Turkey imported 2.6 million tons from Saudi Arabia, followed by Kazakhstan and Russia with 1.3 million tons. TPAO accounted for about 73% of Turkish oil production with the remainder produced mainly by Perenco and Petrom Dorchester.



Source:

Oil and Gas Indicators and Forecasts

Oil and gas sector indicators

Oil and gas sector forecast

Source: EPDK, TPAO,, BMI

2007 2008 2009 2010 2011 2012

Gas imports, mn cub m 35,842 37,350 35,856 38,037 43,875 45,922

Gas production, mn cub m 874 969 684 682 759 632

Gas exports, mn cub m 30.8 435.8 708.5 648.6 714 611

Gas consumption, mn cub m 35,395 36,865 35,219 37,411 43,697 45.242

CNG gas sales, mn cub m 29.1 36.5 33.9 46.2 55.5 54.9

Crude oil production , thou tonnes 2,134 2,160 2,401 2,496 2,367 2,300

Processed oil, mn tonnes 25.59 24.21 16.98 19.55 20.9 22.1

2013 2014 2015 2016 2017 2018

Crude oil production, thou barrels/day 45.2 44.5 43.9 43.3 42.6 42

Crude oil refining capacity, thou barrels/day 564.5 564.5 564.5 564.5 778.5 778.5

Crude oil refining capacity utilisation, % 79.0 79.8 81.4 83.0 81.3 82.9

Gas production, bn cub m 0.6 0.6 0.6 0.5 0.5 0.5

Gas consumption, bn cub m 46.2 47.5 49.0 50.5 52.1 56.4



Source:

Natural Gas Consumption

Gas consumption by users (2012)

The Turkish natural gas consumption in 2012

remained below the initial forecast and totalled some

45.2 bn cub m, up by 3.5 % from the previous year.

Electricity generation companies are the biggest gas

consumers in Turkey. Glass, cement, ceramics

industries as well as steel production account for the

biggest share of gas usage in manufacturing sector.

The total gas consumption was forecast at around

47.6 bn cub m in 2013. The gas consumption is seen

at 46.5 bn cub m in 2014.

A total 33 companies operated on the Turkish natural

gas pipeline wholesale market in 2012. State energy

company BOTAS accounted for 92% of the sales to

end users.

Pipeline wholesale sales (2012)

EPDK

End users 59.6%

Distribution companies

30.5%

Wholesale companies

9.8% CNG

companies 0.1%

Electricity generation

47.8%

Industry 22.2% Residential buildings 19.6%

Commercial, administrative buildings 6.0%

Refinery 3.0%

Other 1.4%



Source:

Comments

Natural Gas Imports

Russian gas represented 58% of the total gas imports to Turkey in 2012, unchanged from the previous year. Turkey imports Russian gas

through Bulgaria and the Blue Stream pipeline under the Black Sea.

The main supply routes for diversification are Azerbaijan and Iran. LNG imports from Algeria and Nigeria comprised 12% of total gas imports

in 2012.

Gas imports by country (mn cub m)

EPDK

0

5,000

10,000

15,000

20,000

25,000

30,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Russia Iran Azerbaijan Algeria Nigeria Spot



Regional Gas Distribution

Source: EPDK Any redistribution of this information is strictly prohibited.

Copyright © 2011 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. - 27 -

Distributors that

started operation

after liberalisation

Distribution tenders

not held yet

Distributors

operating before

market

liberalisation

Licensed

distributors, which

have not started

gas supplies

After the liberalisation of the market in 2005, the energy market regulator EPDK is responsible for gas distribution licence tenders.



Pipeline Projects

Energy hub Aiming to strengthen its position as a regional energy hub, Turkey has joined several international projects in recent years.

BTC

The Baku-Tbilisi-Ceyhan (BTC) pipeline, part of the East-West Energy Corridor, was commissioned in June 2006. It connects the Azeri capital Baku and the Mediterranean seaport Ceyhan through Georgia. In addition to Azeri crude, the pipeline has started pumping Kazakh and Turkmen petroleum since October 2008 and March 2010, respectively. BTC was launched with transmission capacity of 1mn barrels per day. Daily capacity was expanded to 1.2mn barrels and is planned to reach 1.6mn barrels/day.

South

Caucasus

The South Caucasus Pipeline, which runs parallel to BTC, was launched in July 2008. The line, also called the Baku-Tbilisi-

Erzurum Pipeline, BTE pipeline or Shah-Deniz Pipeline, is planned to carry Azeri gas to further European markets through the

interconnector between Turkey and Greece, which was put into operation in November 2007. BTE is designed to have a

capacity of up to 20 bn cub m per year.

TANAP

Trans-Anatolian natural gas pipeline project is to be built from the Turkish-Georgian border to Turkey's border with Europe. The

project is expected to cost USD 20bn and will carry 10 bn cub m of Azeri gas a year to southern Europe and will supply 6 bn

cub m of gas to Turkey. It will be 58% owned by Azerbaijan, 30% by Turkey and 12% by British Petroleum. Supplies are

expected to start from around 2019.

TAP/Nabucco

In June 2013, Trans Adriatic Pipeline (TAP) project was officially selected as the route for the deliveries of Caspian gas to

South East over the rival project Nabucco, in which Turkey has a stake along with Bulgaria, Romania and Hungary. The 520-

km TAP pipeline will transport gas from the Caspian Sea through Greece, Albania, the Adriatic Sea and the Italian region of

Puglia into western Europe. The TAP pipeline will be linked to TANAP.



VI. M&A and Latest Developments



Source:

Top 20 M&A Deals in Energy Sector 2012-2013

Top 20 M&A Deals in Energy Sector

DealWatch

Date Target Company Deal Type Stake % Buyer Country of Buyer Deal Value USD

(mn)

Dec-12 Seyitomer thermal power

plant Privatisation 100 Celikler Insaat Turkey

2,248

Dec-12 Bogazici Elektrik Dagitim Privatisation 100 Limak-Cengiz-Kolin Consortium Turkey 1,960

Dec-12 Enerjisa Enerji Uretim Acquisition 50 E.ON SE Germany 1,955

Mar-13 Toroslar Elektrik Dagitim Privatisation 100 Enerjisa Enerji Uretim Turkey 1,725

Dec-12 Gediz Elektrik Dagitim Privatisation 100 Elsan-Tumas-Karacay Ortak Girism Grubu Turkey 1,231

Mar-13 Istanbul Anadolu Yakasi Privatisation 100 Enerjisa Enerji Uretim Turkey 1,227

Jan-13 Baskent Dogalgaz Privatisation 100 Torunlar Gida Sanayi Turkey 1,162

Feb-13 Kangal Thermal Power Plant Privatisation 100 Konya Seker ; Siyahkalem Muhendislik Turkey 985

Jan-12 Trakya Elektrik Dagitim Privatisation 100 IC Ictas Holding Turkey 590

Nov-13 Osmangazi Elektrik Dagitim Acquisition 100 Polat Insaat Turkey 575



Source:

Top 20 M&A Deals in Energy Sector 2012-2013 (cont’d)

Top 20 M&A Deals in Energy Sector

DealWatch

Date Target Company Deal Type Stake % Buyer Country of Buyer Deal Value USD

(mn)

Nov-12 Akdeniz Elektrik Dagitim Privatisation 100 Limak-Cengiz-Kolin

Consortium Turkey

546

Mar-13 Dicle Elektrik Dagitim Privatisation 100 Iskaya Dogu Ortak

Girisim Grubu Turkey

387

May-12 Galata Wind Enerji ; Akdeniz

Elektrik Uretim Acquisition 100 Dogan Enerji Turkey

300

May-13 Aksa Enerji Uretim Minority stake purchase 16 Institutional Investors 216

Mar-13 Vangolu Elektrik Dagitim Privatisation 100 Turkerler Insaat Turkey 118

Mar-13 Hamitabat Elektrik Uretim Privatisation 100 Limak Holding Turkey 105

Jul-12 Enerji Yatirim Holding Acquisition 50 STFA Holding Turkey 75

Jul-12 Trakya Elektrik Uretim Acquisition 90 Inter RAO UES Russia 68

Mar-13 Kapidag Ruzgar Acquisition 93 Aksa Enerji Uretim Turkey 67

Feb-13 Aksa Enerji Uretim Minority stake purchase 3 The Goldman Sachs

Group Inc United States

60



Latest Developments

Kurdistan oil

In late 2013, Turkey signed and energy deal with Iraqi Kurdistan under which Kurdistan can export some 2 million barrels per

day (bpd) of oil to world markets and at least 10 bn cub m per year of gas to Turkey. Crude oil started flowing via a new pipeline

to Turkey’s Mediterranean export hub of Ceyhan in January 2014. The oil, however will not be shipped to world markets without

the consent of the Iraqi government in Baghdad. Deliveries started at 300,000 barrels per day (bpd) and could rise to 400,000.

Afsin-

Elbistan

The Turkish government has turned to new potential investors for Afsin-Elbistan project in southeastern Turkey after Abu Dhabi

National Energy Co (TAQA) said in August 2013 that it will postpone the plans for the construction of new plants. Earlier in 2013,

TAQA agreed on a project worth up to USD 12bn to modernize and expand the existing 1.4GW coal-fired plant and to add new

capacities of up to 8,000 MW. The Afsin-Elbistan basin possesses 4.86 billion tons of coal reserves, representing 40% Turkey's lignite

resources. Turkey aims to develop its lignite resources in order to reduce its dependence on natural gas imports.

State thermal

power plants

The Privatisation Administration extend the bidding deadlines for the privatisations of thermal power plants. Investors will be

able to submit bids for Kemerkoy-Yenikoy plants, having combined capacity of 1,500 MW, by April 10. The new deadline for

the 300 MW Catalagzi plant is April 21 and offers for the 630 MW Yatagan plant will be accepted by April 30.

GDF Suez

French energy company GDF Suez plans to build a 1,320MW thermal power plant in Adana, southern Turkey, which will cost

some EUR 2bn. GDF Suez has stake in natural Turkish gas-fired Baymina and Unimar plants, which has a total capacity of

about 1,250MW. GDF also owns Turkey’s third largest natural gas distributor Izgaz. In November 2013, the Turkish energy

minister Taner Yildiz said that the French energy company plans EUR 7-8bn worth investments in Turkey.

TPAO

Turkish state oil and gas exploration company TPAO has allocated its biggest budget to date for exploration activities in 2014. It

plans to use TRY 750mn (USD 332mn) to drill 147 wells in 2014 after spending TRY 284mn (USD 125mn) on 115 wells in the

previous year.



VII. Main Players



Highlights

Source:

Elektrik Üretim A.Ş. (EÜAŞ)

Financial performance

Installed capacity by primary resources (2012)

The state-owned electricity producer EÜAŞ was established in 2001 as part of the restructuring of the Turkish energy industry, when it took over 15 thermal and 107 hydropower plants.

At the end of 2012, the company had installed capacity of 24,774 MW. Of these, 12,213 MW was hydropower generation capacity. EÜAŞ’ installed capacity represented 43.4% of the total installed capacity in Turkey at the end of 2012.

EÜAŞ plants with a combined capacity of over 16,000 MW are slated up for privatisation. Three of these power plants (Seyitömer, Hamitabat and Kangal with combined capacity of 2,222 MW) were privatised in 2013.

In 2012, the electric power generated by the company reached 90,575 GWh, of which 52,264 GWh were generated by thermal power plants.

In 2012, EÜAŞ made investments of TRY 316mn (USD 182mn), mainly in renovation, upgrade and efficiency projects.

Company data

Hydraulic 49.3%

Lignite 30.1%

Natural gas 16.6%

Liquid fuels 2.8%

Card coal 1.2%

2008 2009 2010 2011 2011

Net sales (TRY mn) 8,802 8,892 12,413 9,927 10,405

Net loss (TRY mn) 593 1,502 4,433 1,296 474

Production (GWh) 97,717 89,454 95,532 92,351 90,575



Source:

Elektrik Üretim A.Ş. (EÜAŞ) (cont'd)

Generation by primary resources (2012)

Hydroelectric power plants generation (GWh)

Thermal power plants generation (GWh)

Distribution of investment expenditures (2012)

Company data

Hydraulic 42.3%

Lignite 33.1%

Natural gas 22.9%

Card coal 1.6%

Liquid fuels 0.1%

69,297

61,115 54,155 55,462

52,264

2008 2009 2010 2011 2012

28,419 28,338

41,337

36,888 38,311

2008 2009 2010 2011 2012

Generation facilities 46.3%

Operation Group 26%

Machinery 4.9% Feasibilities

1.2%

Mining 21.4%

Vehicles 0.1%



Highlights

Source:

TÜRKİYE PETROL RAFİNERİLERİ A.Ş. (TÜPRAŞ)

Financial performance (USD mn)

Operational indicators (‘000 tons)

Türkiye Petrol Rafinerileri A.Ş. (TÜPRAŞ) is Turkey's

largest industrial enterprise. It operates four refineries

with combined crude processing capacity of 28.1mn

tons and is the seventh largest refiner in Europe.

In 2006, the sole Turkish oil refiner was privatised by

the Koç-Shell joint venture, which paid USD 4.14bn for

a 51% stake. The remainder is publicly held.

TÜPRAŞ holds 79.98% of Ditas, which has one crude

oil tanker with 164,859 DWT and four product tankers

with total 79,685 DWT.

The company also owns a 40% stake in fuel retailer

Opet, which has over 1,300 filling stations.

In 2012 TÜPRAŞ had a 65% market share in

gasoline, jet fuel, diesel and fuel oil. The company’s

storage capacity represents 54% of the country’s

entire storage capacity and the figure increases to

65% if Opet's capacity is included.

Company data

2008 2009 2010 2011 2012

Processed crude oil 24,208 16,975 19,552 20,896 22,118

Refining production 22,780 15,968 18,797 20,209 21,867

Sales 25,957 21,521 22,401 23,897 25,441

Exports 6,112 3,308 4,795 5,152 5,860

Imports 2,931 5,828 3,980 4,124 4,387

17,424

24,302 26,279

490

740

815

830

1,32

9

753

683

1,18

1

603

2010 2011 2012

Net sales After-tax profit EBIDTA Operating profit



Source:

TÜRKİYE PETROL RAFİNERİLERİ A.Ş. (TÜPRAŞ) (cont'd)

Crude oil supply (mn tons)

Production (‘000 tons)

Crude oil value (USD bn)

Sales (‘000 tons)

Company data

14.2

17.3 18.5

19.7

2.2 2.5 2.4 2.3

2009 2010 2011 2012

Imports Domestic

6.3

10.0

14.8 15.9

0.9 1.3 1.7 1.7

2009 2010 2011 2012

Imports Domestic

2011 2012

LPG 760 783

Gasoline & Naphtha 4,594 4,826

Jet Fuel / Kerosene 2,923 3,329

Rural Diesel 335 388

Diesel-ULSD 4975 5173

Middle Distillate 8,233 8,889

Fuel Oils 3,213 3,477

Asphalts 2,959 2,810

Base Oils 399 266

Other 741 815

2011 2012

LPG 883 852

Naphtha 198 273

Gasoline 1810 1782

Jet Fuel / Kerosene 2815 3332

Rural Diesel 78 111

Diesel 7,793 8,457

Middle Distillate 10,686 11,900

Fuel Oils 1,361 1,421

Bitumen 2,951 2,809

Base Oils 380 266

Other 477 277



Highlights

Source:

İstanbul Gaz Dağıtım Sanayi ve Ticaret A.Ş (İGDAŞ)


Gas consumption (bn cub m)

İstanbul Gaz Dağıtım Sanayi ve Ticaret A.Ş. (İGDAŞ)

was founded in 1986 by the Istanbul Metropolitan

Municipality to distribute gas in the city.

The company is the largest gas distributor in Turkey

and its network consists of nearly 15,500 km of

pipelines. İGDAŞ had 5.1mn subscribers and a total of

4.8mn active gas users at the end of 2012.

The company is slated for privatisation and some

twenty Turkish and international companies, including

Gazprom, Gaz de France (GDF) and Shell, have been

reportedly interested in acquiring İGDAŞ.

İGDAŞ is Turkey's sixth largest energy company in

terms of net sales.

Company data

1,634

2,086 2,178

64.4

135.

9

154.

5

-14.

2

65.5

35.7

2010 2011 2012

Net sales Net profit Operating profit/loss

3.99 3.83 3.99

5.37 5.04

2008 2009 2010 2011 2012



Source:

İstanbul Gaz Dağıtım Sanayi ve Ticaret A.Ş (İGDAŞ) (cont’d)

Pipeline network (km)

Subscribers/users (thou)

Number of service boxes

Number of subscribers per employee

Company data

11,977 12,296 12,646 13,209 13,855

1,46

5

1,50

4

1,56

3

1,58

8

1,64

2

2010 2011 2010 2011 2012

Polyethylene line Steel line

3,95

1

4,18

9

4,46

3

4,80

8

5,10

6

3,62

2

3,87

4

4,15

0

4,49

0

4,78

9

2008 2009 2010 2011 2012

Subscribers Gas users

641,699

671,275

693,884

721,878

752,966

2008 2009 2010 2011 2012

1,756 1,888

2,055 2,282

2,440

2008 2009 2010 2011 2012



Highlights

Source:

Türkiye Petrolleri Anonim Ortaklığı (TPAO)


TPAO share in oil production (2012)

Türkiye Petrolleri Anonim Ortaklığı (TPAO) was

founded in 1954 as the sole state oil and gas sector

company.

Today, the company is involved mainly in oil and gas

exploration and production. TPAO is active in Turkey,

Kazakhstan, Azerbaijan, Iraq and Libya.

In 2012, most oil the company's international oil

production came from the Azeri-Chirag-Guneshli

project. TPAO is a shareholder with 9% in the Azeri

gas project Shah Deniz, which plans to start gas

supplies to Southern Europe as of 2019.

The company is also a shareholder in the Baku-Tbilisi-

Ceyhan (BTC) Crude Oil Pipeline and the South

Caucasus Natural Gas Pipeline.

Company data

3,066 3,487

1,039 1,114 714

1,094

2011 2012

Sales revenue Operating profit Net profit

TPAO 73.0%

N.V. Turkse Perenco 17.5%

Petrom Dorchester

5.5% Other 4.0%



Source:

Türkiye Petrolleri Anonim Ortaklığı (TPAO) (cont'd)

TPAO share in gas production (2012)

TPAO shares in gas reserves (2012)

TPAO share in oil reserves (2012)

Exploration

Company data

In recent years, TPAO has intensified exploration activities in

the Black Sea and Mediterranean offshore in cooperation with

global majors like BP, Petrobras, ExxonMobil, Chevron and

Shell.

The company has also entered into agreement to start drilling

for oil or gas in Northern Cyprus.

TPAO 51%

TGT+PIN+CBV 21% Amity Oil 7%

POAS 5%

Other 16%

TPAO 76.2%

Other 23.8%

TPAO 58.1%

Other 41.9%



Contact:

Corporate Headquarters

Nestor House

Playhouse Yard

London EC4V 5EX

UK

Voice: +44 207 779 8471

Fax: +44 207 779 8224

Americas Headquarters

225 Park Avenue South

New York, New York 10003

US

Voice: +1 212 610 2900

Fax: +1 212 610 2950

Asia Headquarters

Eucharistic Congress Bldg. No.

III

4th Floor, 5 Convent Street

Mumbai 400 001

India

Voice: +91 22 22881123

Fax: +91 22 22881137

Disclaimer:

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of the information. The views expressed are our best judgment as of the date of issue and are subject to change without notice. EMIS and Euromoney Institutional

Investor PLC take no responsibility for decisions made on the basis of these opinions.

Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved. A Euromoney Institutional Investor company.

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