Turkey's Operation White Energy has yet to impact major projects

by Charles Coe

While the Turkish government's investigation into alleged corrupt practices within the country's energy industry has taken its toll among politicians and businessmen, Operation White Energy has yet to have a negative effect on the major energy projects in which the country is involved.
The BP-Amoco-led Azerbaijan International Operating Company (AIOC), for example, stated in a recent business update that the basic engineering study for the proposed Baku-Tbilisi-Ceyhan (BTC) crude oil pipeline would soon be finished. Work on the $ 120 mm detailed engineering study should begin in June, the AIOC said.

There has been renewed speculation, however, that Turkey's current financial crisis may push the cost of constructing the Turkish section of the pipeline above the current estimate of $ 1.607 bn. Meanwhile, there's been no indication that plans for importing gas from Azerbaijan's Shah-Deniz field, which is also being developed by a BP-Amoco-led group, may be set aside. Ankara and Baku signed a 15-year agreement in March of this year according to which the Shah-Deniz partners will begin delivering 2 bn cm of natural gas from the offshore field per year in 2004 -- the same start-up date for BTC.
Furthermore, the laying of the underwater section of the Blue Stream natural gas pipeline is due to start this summer with the arrival of ENI's special pipe-laying barge. Italy's ENI and Russia's Gazprom are partners in the project, which will eventually allow Turkey to import an extra 16 bn cm of Russian natural gas per year.
In the meantime, work on natural gas pipeline networks in Turkey is progressing despite the fact that investigators from Ankara's State Security Court have said they will investigate all tenders for energy works that have been issued in recent years.

When Operation White Energy was launched by the Turkish authorities in January of this year, following on the heels of a scandal in the banking sector in late 2000, it created considerable uproar among the country's political parties. Political corruption is allegedly widespread in Turkey, and the new round of financial crisis loans that Ankara has obtained from the International Monetary Fund (IMF) and the World Bank are conditional upon a number of reforms.
While Turkey now has roughly $ 15 bn in loans that can be drawn upon to see it through the crisis, implementation of the reform program is crucial. The parliament has in recent weeks passed energy sector liberalization laws, but the process of putting the laws into effect is not expected to be smooth.
Last month, Turkey's chief prosecutor indicted 15 senior government officials from the energy sector and businessmen on charges of corruption, organizing a criminal gang, taking and accepting bribes and abuse of office. The indictment brought about the resignation of Energy Minister Cumhur Ersumer, who remains beyond the investigation because of his parliamentary immunity.
However, several of the indicted officials alleged in their testimony that Ersumer pressured them to favour one bidder over another. Three more senior energy officials, including the chairman and general manager of the Turkish Electricity Distribution Corp (TEDAS) were arrested several days later. The investigation continues.