BOTAŞ PETROLEUM PIPELINE CORP. BOTAŞ Projects and the Energy World Current Issues & Future Prospects of the Industry Emre Engür Head of International Projects Department May, 2011

BOTAŞ with Numbers Established in 1974 Built, Own and Operate 2,332 kms of domestic and cross-border oil pipeline system Built and Operate 1,076 kms BTC Pipeline System (P/L, Loading Terminal, 4 PS etc) Built, Own and Operate 12,000 kms of pipeline transmission system with 318 MW Compressor Station power Built, Owned, Operated and Transferred 2 city distribution system (Bursa, Eskişehir) US $ 12 bn sales revenue (2009)

Crude Oil Pipelines C D F E B A 3400 kms of Crude Oil Pipeline GEORGIA BULGARIA GEORGIA Kırklareli Edirne Zonguldak Bartın AZ GREECE İstanbul Samsun Ardahan Ordu Trabzon Artvin Kars ARMENIA Sakarya Amasya Gümüşhane C Çanakkale Bursa Ankara Bayburt Kırıkkale Yozgat Sivas Erzurum Horasan 3400 kms of Crude Oil Pipeline Eskişehir Erzincan Aliağa Afyon Kırşehir D F Kayseri E Şelmo IRAN İzmir Turgutlu Nevşehir Malatya Diyarbakır Batman B Konya Aksaray Adıyaman Şırnak Kahramanmaraş Muğla A Mardin Karaman Gaziantep Şanlıurfa Antalya Ceyhan İskenderun IRAQ SYRIA A : I. KERKUK-CEYHAN CRUDE OIL PL 40" 641 KM B : II. KERKUK-CEYHAN CRUDE OIL PL 46" 656 KM C : BAKU TBILISI CEYHAN CRUDE OIL PL 30“ 42“ 46“ 1076 KM 50 MTA CAPACITY D : SELMO-BATMAN CRUDE OIL PL 6" 8“ 12“ 41 KM 0.8 MTA CAPACITY E : BATMAN-DORTYOL CRUDE OIL PL 18“ 511 KM 4.5 MTA CAPACITY F : CEYHAN-KIRIKKALE CRUDE OIL PL 24" 448 KM 7.2 MTA CAPACITY 71 MTA CAPACITY

High Pressure Natural Gas Pipelines kms 14000 Length of Pipelines in 1989 845 kms Length of Pipelines in 2000 1,875 kms Length of Pipelines in 2010 >12,000 kms Provinces reached: 67 Upon completion of existing investments: 72 Target: All over the country 12,024 12000 11,629 10,620 10000 8.333 7,809 8000 6000 6,078 5,245 4,510 4000 2,000 3,490 1,704 1,878 1,878 1,731 1,899 2000 1,270 1,693 1,490 1,035 1,220 1,220 1,239 845 845 845 1,020 833 912 1,009 735 423 395 190 185 19 31 11 174 122 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 BOTAŞ existing system reached all over the country, waiting to transit to Europe...

Natural Gas Pipeline System & Supply Contracts 14 BCM Russian Fed (6 BCM+ 8 BCM) 6.6 BCM Azerbaijan Russian Fed (Blue Stream) 16 BCM Turkmenistan 16 BCM LNG (Algeria + Nigeria) 5.2 BCM Iran 10 BCM Iraq 10+ BCM ? Existing Imports (Plateau Period) Planned/Hanging Gas Contracts Gas source diversification, Security of Supply!

Natural Gas Supply Contracts

Natural Gas Imports and Consumption 32.5 BCM 2010 37.8 BCM 2008 Import by Countries 17.0 BCM 2002 0.5 BCM 1987 Consumption by Sectors

Supply Potentials to Growing European Demand European gas demand grows, Supply sources waiting to be developed

Interconnector Turkey-Greece Project (ITG) (first phase) First Phase of Interconnector Turkey-Greece-Italy (ITGI) Total Pipe Length : 296 km Turkey (Onshore) : 211 km Offshore : 17 km Gas Supply Date : 16 November 2007

Gas to Southern Europe: Greece and Italy (second phase) Interconnector Turkey-Greece (ITG): (First Phase) The engineering and EIA studies conducted. Half cost of these studies are granted by EU TEN funds. Basic and Detailed engineering studies of the project completed in 2003. Construction completed late 2007 Natural Gas Sales and Purchase Agreement was signed on December 23, 2003 in Ankara, by Botas and Depa. Accordingly, delivery volume by the line will be 750 MCM to DEPA. The line is operational since late 2007. Interconnector Turkey-Greece-Italy (ITGI): (Second Phase) gas volume is envisaged to be increased to 12 BCMA in 2016 of which 8 BCMA for the Italian market and the rest to the Greek market. BOTAS, DEPA and Edison are in cooperation for the project. Technical feasibility study is completed and studies are ongoing. IGA signed on the 26th of July 2007 in Rome Latest MoU signed by Botaş, Depa and Edison on the 17th of June 2010

The Turkey-Greece-Italy (ITGI) Project The first and most important step for the realization of South European Gas Ring Project (SEGR) is Turkey‐Greece‐Italy Pipeline Project. The aim is to transport natural gas from the potential producers of the Caspian and Middle East to Greece and Italy via Turkey. 3.6 bcma-Greece 8 bcma-Italy Total 11.6 bcma

The Nabucco Project At the first stage, feeder lines to transport gas from points on the Georgian and Iraqi borders to Sivas, where the main Nabucco pipeline will start. 3,300 to 4,000 kms (depending on feeders) 56” line Approx. 2 million tonnes steel 31 BCM capacity Total budget of the project is estimated to be some € 8 billion Target Start Date: 2016

Gas to Central & Western Europe: The Nabucco Project The Nabucco Gas Pipeline Project will connect Turkey with Austria via Bulgaria, Romania and Hungary. In February 2002 the project is proposed by Botas to relevant companies and the Co-operation Agreement was signed among the associated companies of respective countries on October 11, 2002. Five companies, namely BOTAS (Turkey), Bulgargaz (Bulgaria), Transgaz (Romania), MOL (Hungary) and OMV Gas (Austria) have established the Nabucco Gas Pipeline International Co. to invest in a pipeline to transport natural gas from points on the eastern/sothern borders of Turkey to facilities at Baumgarten in Austria. The project is planned to transport up to 31 bcm/y of natural gas from Caspian Region and the Middle East. Studies are going on for issues like finance, marketing, legal works, shipping contracts FEED study ongoing A new partner joined in Febrary 2008: RWE IGA signed on the 13th of July 2009 in Ankara

Trans-Adriatic Pipeline Project (TAP) First EGL Proposal EGL, StatoilHydro & EoN Ruhrgas Partnership 10 BCM planned 20 BCM potential Source: TAP

Transit Through Turkey All projects started in a better world of Supply Direction of supply to show the first comer Still target to have all realised at the same period TAP BOTAŞ Transit System IGI ITGI

Projections for Turkey-More Sources to Reach Turkey seems to remain as a net importer of natural gas. Economy recovers nd gas consumption to start rising, increasing the bill for imports to real significant numbers. With current level of dependency on natural gas in power generation and industry, significant price reductions are needed to keep the industry competitive. Balanced diversification of supplies is essential to reduce dependency on particular supply sources as well as import prices International projects of trade and transit will be important for such diversification.

What to Gain from Transit-Security of Supply Cost-based transmission tariffs Use of existing infrastructure and idle capacities to the extent possible TRADE AND TRANSIT TRADE AND TRANSIT Partial exemption from TPA for trading of excess volumes Removal of final destination clauses MORE FAVORABLE GAS PRICE CONDITIONS Some kind of a netback price mechanism for domestic consumption Balanced diversification of supplies ENHANCED SECURITY OF SUPPLY Underground storage capacities to serve both domestic market and end consumers in Euope

Trans-Caspian Kazakh Gas Austria Nabucco Trans-Caspian Kazakh Gas Russian Gas-West Bosnia Herzegovina Blue Stream TAP Potential Hub Shah Deniz Trans-Caspian Turkmenian Gas ITG Nabucco İzmir ITGI Arab Gas PL Iraqi Gas Iranian Gas Ceyhan potential LNG liq. Egyptian Gas Arab Gas PL