Caspian Report - Issue: 07 - Spring 2014

Projected investment cost of TANAP is
around USD 12 billion. Turkish companies
are expected to be granted works worth
some USD 5-6 billion for supply of pipes and
construction works.
May 30, 2014 was remarked as an
important date in the Turkish energy
sector. Turkish national petroleum
company TPAO took over Total’s
10% stake in the Shah Deniz Consortium
and thus increased total share
to 19%. On the same day, Turkey’s
national pipeline operator BOTAŞ increased
her share in TANAP to 30%.
These developments will certainly
contribute to Turkey’s long-standing
quest to become a regional energy
hub and bring significant economic
gains. In this note we focus on importance
of the TANAP for Turkish energy
market and economic benefits
of the project for Turkey.
Income and Employment
Effects of TANAP
Projected investment cost of TANAP
is around USD 12 billion. Naturally,
domestic companies will be involved
in implementation of works under
this project. Turkish companies are
expected to be granted works worth
some USD 5-6 billion for supply of
pipes and construction works. In addition,
according to some estimates
about 15.000 direct and tens of thousands
of indirect jobs will be created
during the construction phase. Furthermore,
the project will create permanent
direct jobs throughout life of
the pipeline.
Turkey will also have permanent
steam of income from operation of
the pipeline as state-owned BOTAŞ
holds 30% share in TANAP. Assuming
that transmission capacity of
TANAP reaches to 31 bcm/year by
2026, total net income of BOTAŞ
from operation of the pipeline may
reach to USD 17 billion in real terms
till the period 2045.
These are direct and observable
benefits of the project for the Turkish
economy. Such a huge infrastructure
investment will definitely generate
enormous economic activity
throughout construction phase and
will contribute to permanent economic
growth of Turkey in the long
run through the multiplier effect. According
to our preliminary estimates,
the TANAP project may increase
gross domestic product (GDP) of
Turkey by approximately USD 37 billion
by 2029. This implies that GDP of
125
CASPIAN REPORT, SPRING 2014