Category: Business

Istanbul to become center of attention for Africans

Chairman of Property Investors’ Association of Arab Countries and Turkic States, Abdullah Ciftci, has stated that wealthy Africans would start to prefer Istanbul to invest in real estate.

Stating that Turkey drew attention from Africa and the Arab world following Turkish Prime Minister Recep Tayyip Erdogan’s visits to these countries, Ciftci said, “Together with reciprocity, the Arabs took action to buy real estate in Turkey. However, not only Arabs’, but also African citizens’ purchasing of real estate from Turkey is to increase.”

“Turkish PM Erdogan’s initiatives and visits in different Arab countries led way to Turks and Arabs remembering their historical ties and Arabs headed towards Turkey. Similarly, Africa with 55 countries and over one billion in population, has a sympathy towards Turkey,” said Ciftci.

Ciftci also said that the wealthy Africans and businessmen who used to buy real estate in metropolitan cities of the world such as London, Paris and New York, are to prefer Istanbul in politically and economically re-shaping world.

via Istanbul to become center of attention for Africans | Economy | World Bulletin.

January 12, 2013
Turkey looks to speed up exploration

Exploration: Turkey aims for energy independence

Turkey is drilling for oil and natural gas with more rigs than any European country and plans new rules in 2013 to speed exploration of energy supplies, according to a report.

Turkey fielded 26 rigs as of 31 December, according to data compiled by Bloomberg, and the number has since risen to 34, Energy Ministry officials said this week.

Turkey has leapfrogged Norway as offshore drilling increased in the Black and Mediterranean seas. Spending on exploration jumped to $610 million last year from $42 million a decade earlier, the news wire reported.

With economic growth forecast at 3.5% this year and about twice the pace of the most advanced economies to 2017, Turkey is drilling for its own energy to ease reliance on imports from Iran, Iraq and Russia.

State-owned Turkish Petroleum (TPAO) has taken supermajors Shell and ExxonMobil as partners, after neighbouring Israel and Cyprus made some of the decade’s biggest gas finds in the past three years.

“If there’s one country that needs energy, it’s Turkey,” Darren Engels, an analyst at FirstEnergy Capital in Calgary, told Bloomberg. “Their domestic business doesn’t scratch the surface.”

TPAO – which has operations in Libya, Iraq, Azerbaijan, Colombia and Kazakhstan – needs to boost domestic output as it pursues a target of supplying all of Turkey’s energy needs by 2023.

Turkey had proved reserves of 307 million barrels of oil and gas in 2010, 88% of which is oil, according to Engels. In 2011 alone, the country consumed about 258 million barrels, according to the EIA.

To speed up the search for oil and gas, the government submitted a draft Petroleum Law to Parliament on 21 December. The bill calls for changes to “ensure speedy, continuous and efficient search of carbon resources”, requiring companies to pledge 2% of their projects as collateral to extend licenses.

“Our aim is to make Turkey one of the 10 largest economies in the world by 2023,” Energy Minister Taner Yildiz told Bloomberg. “Finding energy (will) enable Turkey to achieve its goal.”

Turkey imported about 92% of the oil it consumed in 2011 and 98% of the natural gas, according to the US Energy Information Administration.

In the past, TPAO was designated as the national company tasked with searching and drilling oil and gas reserves in the country. The draft law no longer defines TPAO as such and in theory it will be treated like any other company, Necdet Pamir, head of Energy Studies Group at Ankara-based Chamber of Petroleum Engineers, told Bloomberg.

TPAO is just one of the contributors to the domestic drilling boom. Shell, ExxonMobil and smaller explorers such as Transatlantic Petroleum and Anatolia Energy are also investing.

The Turkish government “is doing everything it can to attract the foreign majors,” said Timothy Ash, head of emerging-market research at Standard Bank Group.

TPAO and Shell plan to start drilling off the coast of Antalya in the Mediterranean in 2015, Yildiz said.

“TPAO is also planning to drill in the Black Sea in Kuskayasi field in 2014, which was abandoned by Chevron. Obviously, it would be cheaper if it can find a partner.”

Energy officials in the ministry say the complex geology of Turkey makes it more difficult to find large reserves compared with neighbours.

The Mediterranean and Black Sea regions are more likely to hold gas, while the southern part of the country is more likely to hold oil, said FirstEnergy’s Engels.

Turkey produced 2.3 million tons of oil in 2012. The average production is 44,000 barrels per day, according to official figures. In contrast, Norway produced about 2 bpd in 2011, according to BP’s Statistical Review of World Energy. Russia produced 10 million bpd.

TPAO’s share in production of oil at home was 69% in the first 11 months of 2012 with the rest divided among others such as Perenco, Tiway Oil of Norway, Amity Oil International, Transatlantic Petroleum and Aladdin Middle East.

via Turkey looks to speed up exploration – Upstreamonline.com.

January 11, 2013
Turkey Beating Norway as Biggest Regional Oil Driller: Energy

Turkey is drilling for oil and natural gas with more rigs than any European country and plans new rules in 2013 to speed exploration of energy supplies for the fastest-growing major economy after China.

The country fielded 26 rigs at Dec. 31, according to data compiled by Bloomberg, and the number has since risen to 34, Energy Ministry officials said yesterday. Turkey has leapfrogged Norway as offshore drilling increased in the Black and Mediterranean seas. Spending on exploration jumped to $610 million last year from $42 million a decade earlier.

Turkish Petroleum, which is known as TPAO and has operations in Libya, Iraq, Azerbaijan and Kazakhstan, needs to boost domestic output as it pursues a target of supplying all of Turkey’s energy needs by 2023. Photographer: Adem Altan/AFP/Getty Images

With economic growth forecast at 3.5 percent this year and about twice the pace of the most advanced economies to 2017, Turkey is drilling for its own energy to ease reliance on imports from Iran, Iraq and Russia. State-owned Turkish Petroleum Corp. has taken Royal Dutch Shell Plc (RDSA) and Exxon Mobil Corp. (XOM) as partners, after neighboring Israel and Cyprus made some of the decade’s biggest gas finds in the past three years.

“If there’s one country that needs energy, it’s Turkey,” said Darren Engels, an analyst at FirstEnergy Capital in Calgary. “Their domestic business doesn’t scratch the surface.”

Turkish Petroleum, which is known as TPAO and has operations in Libya, Iraq, Azerbaijan, Colombia and Kazakhstan, needs to boost domestic output as it pursues a target of supplying all of Turkey’s energy needs by 2023.

Turkey had proved reserves of 307 million barrels of oil and gas in 2010, 88 percent of which is oil, according to FirstEnergy’s Engels. In 2011 alone, the country consumed about 258 million barrels, according to the EIA.

Rules Changing

To speed up the search for oil and gas, the government submitted a draft Petroleum Law to Parliament on Dec. 21. The bill calls for changes to “ensure speedy, continuous and efficient search of carbon resources,” requiring companies to pledge 2 percent of their projects as collateral to extend licenses, a move aimed at increasing activity and avoiding speculation on licenses.

“Our aim is to make Turkey one of the 10 largest economies in the world by 2023,” Energy Minister Taner Yildiz said yesterday in an interview. “Finding energy” will “enable Turkey to achieve its goal.”

Turkey imported about 92 percent of the oil it consumed in 2011 and 98 percent of the natural gas, according to the U.S. Energy Information Administration.

The scale of Turkey’s energy imports is swelling the current account deficit, fueling inflation and threatening to restrain economic growth.

Equal Treatment

In the past, TPAO was designated as the national company tasked with searching and drilling oil and gas reserves in the country. The draft law no longer defines TPAO as such and in theory it will be treated like any other company, Necdet Pamir, head of Energy Studies Group at Ankara-based Chamber of Petroleum Engineers, said by telephone Jan. 9.

“Foreign companies are complaining that working conditions in Turkey are not favorable for them since they have to play with rules of the TPAO, which holds exclusively all offshore licenses,” Pamir said. “Chevron for example decided to pull out after drilling the first of two wells at its own cost in the Black Sea and paid a penalty under its agreement with TPAO.”

TPAO is just one of the contributors to the domestic drilling boom. Shell, Exxon and smaller explorers such as Transatlantic Petroleum (TAT) and Anatolia Energy (AEE) are investing.

The Turkish government “is doing everything it can to attract the foreign majors,” said Timothy Ash, head of emerging-market research at Standard Bank Group Ltd.

Turkish Geology

TPAO and Shell plan to start drilling off the coast of Antalya in the Mediterranean in 2015, Yildiz said. “TPAO is also planning to drill in the Black Sea in Kuskayasi field in 2014, which was abandoned by Chevron. Obviously, it would be cheaper if it can find a partner.”

Energy officials in the ministry say the geology of Turkey, a country which is crisscrossed by active fault lines, makes it more difficult to find large reserves compared with neighbors.

The Mediterranean and Black Sea regions are more likely to hold gas, while the southern part of the country is more likely to hold oil, said FirstEnergy’s Engels.

Turkey produced 2.3 million tons of oil in 2012. The average production is 44,000 barrels a day with domestic production meeting 8 percent of overall consumption needs, according to official figures. In contrast, Norway produced about 2 million barrels of oil a day in 2011, according to BP Plc’s Statistical Review of World Energy. Russia produced 10 million barrels a day.

Perenco, Amity

TPAO’s share in production of oil at home was 69 percent in the first 11 months of 2012 with the rest divided among others such as Perenco SA, Tiway Oil AS of Norway, Amity Oil International, Transatlantic Petroleum Ltd. and Aladdin Middle East Ltd.

While the country has found little oil and gas in its territories, it’s one of the world’s big transport hubs for energy. With an area larger than Texas nestled between Europe and the oil-rich Middle East and countries of the former Soviet Union, Turkey has four major pipelines sending gas to Europe and there are plans for two more. It has four oil pipelines to bring crude from Iraq and the Caspian.

Turkey may also benefit from plans by Iraq’s Kurdistan Regional Government to build a pipeline to the north that would end dependency on Iraq’s export infrastructure, which is controlled by Baghdad authorities.

IMF Forecasts

The country’s future depends on having secure supplies of energy. The International Monetary Fund forecast Turkey’s economy will expand 3.5 percent this year, compared with 2.1 percent in the U.S. and 0.2 percent in the euro area.

In 2017, Turkey will expand 4.4 percent, while advanced economies will grow 2.6 percent on average. In 2011, Turkey was the 18th largest economy in the world and expanded faster than any other in the top 20 after China.

Turkey got about half of its oil from Iran in 2012 and is compensating for decreased purchases through imports from Saudi Arabia, Libya and Russia amid U.S. sanctions, Yildiz said.

Turkey’s contract to buy oil from Iran will “definitely be extended,” Yildiz told reporters on a plane from Libya to Qatar on Jan. 6. “Turkey now buys 35-40 percent of its oil needs from Iran, compared with 50 percent before” international sanctions against Iran.

January 10, 2013
Turkey’s New Year’s Gift: Record Low Borrowing Costs

By Emre Peker and Yeliz Candemir

ISTANBUL—Turkey is enjoying quite a turnaround. Exactly a year ago, economists questioned Governor Erdem Basci’s unorthodox policies and the central bank was forced to more than double interest rates to 12% in an effort to prop up Turkey’s plunging currency and to fight double-digit inflation.

Now, the $800 billion Turkish economy’s rebalancing in the past year has secured not only an investment-grade status from Fitch Ratings in November but also the “Central Bank Governor Of The Year” award for Mr. Basci from The Banker, a financial publication, helping to feed an already fiery surge in investor confidence.

The proof: a $1.5-billion 10-year bond sale on Tuesday at an all-time low yield of 3.473% amid overwhelming demand. That compares with a similar issuance in January 2011, when Ankara paid 6.35% to investors. What’s more, the Treasury’s lira-bond sales this week were 25 times oversubscribed, helping cut yields on the benchmark two-year debt to 5.96% on Wednesday.

“These sales show the positive outlook on Turkey. Economic stability and improvement in all the indicators in Turkey at such a turbulent time in global markets is increasing confidence in the central bank and the country,” said Cem Tozge of Ata Asset Management in Istanbul.

Turkey’s lure for investors is underpinned by improving fundamentals. Inflation slowed to 6.2% in December from a 3.5-year high of 11.1% in April; the current-account deficit narrowed to 6.5% of gross domestic product in October from 10% a year earlier; and 2013 economic growth is expected at more than 3.5% that’s set to outpace other emerging market peers such as Mexico, Poland and South Africa, according to International Monetary Fund forecasts.

To be sure, it wasn’t a slam dunk for Turkey and Mr. Basci.

When the governor initiated his unorthodox policy in October 2011, most economists accused the central bank of obscuring its monetary stance.

By January of last year, Tim Ash, Standard Bank Plc’s head of emerging market research who was then a chief economist at Royal Bank of Scotland Group Plc, RBS.LN +1.97% quipped: “The market is increasingly confused by the central bank’s policy strategy; it’s either going to win them a Nobel Prize or it’s a road to nowhere.”

Yet despite its complexity, it did neither.

“The result [of Mr. Basci’s policies], at least so far, is a soft landing for Turkey rather than the boom-and-bust scenario that was threatening to unfold,” The Banker said in awarding the central bank governor with its annual award.

But the mechanisms didn’t get any simpler. The central bank still uses an interest rate corridor where funding costs are set daily between 5% and 9%, manages market liquidity, shifts reserve requirements, and simultaneously targets the exchange rate, inflation and financial stability.

What’s more, Turkey’s success in the bond markets is not all of its own making: low interest rates around the world have left investors clamoring for places to park cash, leading to blowout bond deals of late for borrowers such as Mexico and even Mongolia.

Still, the country’s debt rating helps. Moody’s Investors Service is widely expected to award Turkey with a second investment-grade rating this year, which would unleash a flood of cash from foreign investors as the Treasury plans to raise about $8 billion in international debt markets.

“Because of the second-rating upgrade anticipation, interest rates will generally be on a downward trend,” said Ugur Kucuk, a fixed income strategist at Is Investment in Istanbul.

That’s good news for the Treasury, which recorded a 25 billion lira ($14 billion) deficit in 2012, compared with a 15.2 billion lira shortfall in 2011. The biggest gap since 2010 indicates that the government’s fiscal performance weakened amid Turkey’s economic rebalancing, where declining consumer spending sapped the state from tax revenues.

“I don’t think it’s an alarming situation as the government may make up for the widening deficit in 2012 by increasing revenues from privatizations this year,” Mr. Kucuk said. Then, pointing to demand for Turkish debt in international markets, he added, “Or the Treasury can just borrow more through bond sales.”

Erdem Basci,

monetary policy,

Turkey

via Turkey’s New Year’s Gift: Record Low Borrowing Costs – Emerging Europe Real Time – WSJ.

January 10, 2013
Renault to Increase Turkey Production on Recovering Local Demand

Renault SA (RNO), whose plant in Turkey makes more than half the cars manufactured in the country, plans to increase local production to take advantage of a market expected to grow slightly compared with last year.

Oyak-Renault Otomobil Fabrikalari AS, a joint venture between Renault and Turkey’s military pension fund Oyak Group, will try to use as much as 92 percent of the 360,000 vehicles-a- year capacity at the Bursa plant this year, compared with almost 86 percent in 2012, Tarik Tunalioglu, chief executive of the joint venture, said in a news conference in Istanbul today.

“We want to increase production because we are expecting a bigger demand for our new models this year, especially Clio 4,” Tunalioglu said. “More than half of our production this year will be the Clio 4 model.”

Turkish car and van sales are expected to grow about 3 percent to 780,000 this year, said Ibrahim Aybar, chief executive of Renault Mais Motorlu Araclar Imal & Satis AS, the sales joint venture between Renault and Oyak Group. Turkey’s total vehicle market contracted 11.5 percent last year after a September tax increase on cars combined with slower economic growth to curb consumer demand.

Market Share

Renault’s 2012 sales in Turkey were $4.2 billion, Tunalioglu said, without giving a year-on-year comparison. Exports fell slightly to $3.15 billion from $3.21 billion in 2011. Renault produces sedan models of Fluence, Clio 4 and Megane at the Turkish plant.

Renault Mais, which also sells imported Dacia models, expects to introduce new models in Turkey in order to increase sales from 118,000 units last year, Aybar said. “We want to increase our market share in Turkey this year from 13.1 percent in 2012,” he said.

Renault will start selling nine new models in the Turkish market this year including Scenic, Latitude, Dacia Sandero and electric vehicle Zoe, Aybar said.

Oyak-Renault will continue its three-shift production at the plant, Tunalioglu said, while competitor Tofas Turk Otomobil Fabrikasi AS (TOASO), a joint venture made up of Fiat SpA (F) and Koc Holding AS (KCHOL), said Jan. 2 it will cut shifts to two because of weak demand from European markets.

Toyota Motor Corp. (7203), Honda Motor Co. (7267) and Hyundai Motor Co. (005380) are among manufacturers of cars, vans, trucks and buses that sell local and imported brands in Turkey. The country’s total motor vehicle sales fell to 815,000 units in 2012, said Mustafa Bayraktar, head of Turkey’s Car Distributors’ Association.

Renault will invest 55 million euros ($73 million) in the Bursa plant, compared with $212 million last year, Tunalioglu said.

via Renault to Increase Turkey Production on Recovering Local Demand – Bloomberg.

January 10, 2013
Turkey Aims to Buy More LNG

Turkey aims to buy extra 6 Bcm of liquefied natural gas, including some from Qatar, under long-term contracts to meet its growing energy needs, Reuters reported, citing Turkish Energy Minister Taner Yildiz.

He said that the country is already in negotiations with Qatar, but Qatar may not provide all of the additional LNG, therefore Turkey could also buy LNG from the United States if the latter is willing to sell.

The Minister also recently said that his country will discuss building an LNG terminal with Qatar on its Aegean coast.

via Turkey Aims to Buy More LNG>> LNG World News.

January 10, 2013