China and Turkey in talks over US$12 billion coal investment

PUBLISHED : Wednesday, 07 May, 2014, 1:08am
UPDATED : Wednesday, 07 May, 2014, 1:08am

Turkey and China are in talks on a US$10 billion to US$12 billion investment deal for the Afsin-Elbistan coalfield and power plant project in southern Turkey, said Turkish energy minister Taner Yildiz.

Turkey is keen to make the most of its coal resources to reduce the country's imports of natural gas and signed a deal with Abu Dhabi National Energy on the project in January last year.

However, Taqa said in August that it was delaying investment and Turkey subsequently began talks with other companies.

"There will be an investment of US$10 billion to US$12 billion in the Afsin-Elbistan field," Yildiz said on Sunday. "This will include use of the coalfields. We are in talks with China for a deal on this subject."

This is a big project. We have to set up the [coal]field project correctly

It was not possible to say when any deal with China might be signed, he said.

The Afsin-Elbistan region holds up to 45 per cent of Turkey's lignite reserves and the project includes the construction of a 8,000 megawatt coal-fired power plant.

"This is a big project," Yildiz said. "We have to set up the Afsin-Elbistan field project correctly. We have a big store of information. We are working with China on this."

Lignite, or brown coal, is likely to play a bigger role in power generation as Turkey's economic growth bolsters demand for electricity.

Moving on to gas projects, Yildiz said Turkey was not planning to be a partner in the Trans Adriatic Gas Pipeline Group (Tap) project, which will transport gas from the Shah Deniz II field in Azerbaijan to Europe by the end of this decade.

The approximately 870-kilometre-long pipeline will con- nect with the Trans Anatolian Pipeline (Tanap) near the Turkish-Greek border at Kipoi, cross Greece and Albania and the Adriatic Sea, before reaching southern Italy.

Yildiz said Turkey planned to raise its stake in Tanap to 30 per cent from 20 per cent, with the remaining stake held by Azeri energy company Socar.

"The increase in our stake in Tanap will be more appropriate both in terms of the capital structure and the operation," he said. "Shares in both Tap and Tanap could change hands a lot.

"Tap is not currently on our agenda. We will assess the subsequent developments."

Yildiz said the plan was for gas flow on the Tanap project to be ready by the end of 2018, with initial gas transport of 16 billion cubic metres (bcm) annually. Turkey would take six bcm, with the remaining 10 bcm sent to Europe.

Annual capacity is expected to increase to 31 bcm when the second stage of the project is completed.