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Turkey Freight Transportation Report Q2 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: May 2008 Product Code: R302-3380 Description Energy minister Hilmi Guler said at the end of January that Turkey could finalise a deal to develop Iranian gas fields and build a natural gas pipeline between the two countries by the end of February. In2007 the two countries had signed various memoranda of understanding on gas development, which werecriticised by the United States, concerned that they might undermine its strategy of isolating Iraninternationally because of the dispute over Tehran’s nuclear energy programme. The proposed agreementfor the development of Iran’s South Pars gas fields was believed to involve investment of some US$3.5bn. Turkish-Iranian relations meanwhile seemed to have overcome any potential tensions causedby Iran’s decision to cut gas supplies to its neighbour. At the end of January Iran resumed pumpingnatural gas by pipeline to Turkey after an interruption of approximately three weeks, caused by the severewinter, which raised domestic Iranian demand, and by a short fall in gas shipments from Turkmenistan to Iran. Iranian gas supplies round 20% of Turkey’s domestic demand. Supplies have been erratic in the pastbecause of peaks and troughs in domestic Iranian demand. In this case the interruption caused no majorshortages in Turkey because another supplier, Russia, was able to increase its volumes to cover theshortfall. According to a local press report in Turkey, Ahmad Noorani, an official at the Iranian embassyin Ankara, said that his country would look at building a separate pipeline to Turkey to avoid futurefluctuations in supply. Building pipeline links is strategically important to Turkey, and part of its widerambition to turn the country into a ‘energy bridge’ between Asia, the Middle East, and Europe. On thelong term the Turkish government sees the South Pars agreement not only meeting the expected energyshortfall in Turkey, but also matching Europe’s strategic desire to reduce its dependence on Russian gas.Turkey is also involved in other pipeline projects, such as the Baku Tbilisi Ceyhan (BTC) oil pipeline, which cost about US$4bn to build, and was officially opened in 2006. The US$6bn European-backed Nabucco pipeline project is designed to carry natural gas from Caspian and Middle Eastern countries via Turkey, Bulgaria, Romania and Hungary to Austria and Western Europe. A new gas pipeline to Greecebegan operating in 2007. In our latest Turkey Freight Transport Report, BMI concludes that oil and gaspipeline throughput is set to grow by an annual average of 11.4% across the 2008-2012 forecast period.Various factors support this prediction. Strong Turkish economic growth, set to average 6.3% per annumin the next five years, will underpin rising energy demand. More importantly, however, Turkey is set tobecome a pipeline hub for Europe. The BTC and the Nabucco line are among several projects, initiallydevised to meet Turkish energy demand, that have also drawn growing European interest as a gas supplyroute from the energy-rich Caspian. Among other plans for the energy corridor are an oil pipelinebetween Samsun on the Black Sea and Ceyhan, as well as two gas pipelines from Russia, which wants toextend the Blue Stream pipeline to Israel. Turkey receives gas via a pipeline from Iran, while the Shakh-Deniz project, now functioning, is bringing Azerbaijani gas from the Caspian to Turkey.Pipeline developments come against a generally favourable outlook for the freight sector as a whole. Bythe end of the forecast period to 2012, sea freight is anticipated to be the largest sub-sector, accounting forapproximately 50% of all shipments, compared with 43% for road freight. By transport mode, we expectthe fastest growing to be airfreight at an annual average of 12.3%; followed by pipeline throughput at11.4%; maritime cargo at 9.4%; road haulage at 6.6% and rail freight at 3.3%. With a score of 65.7 out of100, Turkey’s overall freight rating is above the average for the Middle East and Africa (MEA) region.Turkey scores well in terms of infrastructure growth, regulatory and competitive environments and thetransport intensity index. For the 2008-2012 forecast period, we expect the transport and communications sector to continueoutpacing the economy as a whole in value terms. It will achieve average annual growth of 6.5%, versus6.3% for overall GDP. The total value of transport and communications GDP will rise to US$123.5bn innominal terms by 2012, representing 11.3% of Turkey’s GDP. Table of Contents
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