Watching GovernmentAftershocks

Sept. 20, 1999
Turkey suffered not only severe physical damage in the tremendous earthquake Aug. 17 but also subtle damage to its oil ambitions.

Turkey suffered not only severe physical damage in the tremendous earthquake Aug. 17 but also subtle damage to its oil ambitions.

Hardest hit was the 226,000 b/d Tupras Turkiye Petrol Rafinerileri AS refinery at Izmit.

The refinery suffered a major fire after the earthquake, sustaining about $200 million in damages.

The plant, which had supplied about a third of Turkey's products demand, is expected to resume full production in about 4 months.

It was designed to withstand an earthquake measuring 9 on the Richter scale but was near the epicenter of a shock that registered 7.8. A tower collapsed, and seven tanks caught fire.

It took 4 days to extinguish the blazes, which rocked Izmit with explosions and filled the air with dense smoke. Firefighting planes bombarded the flames with water and fire-retardant chemicals, but basically, the fire burned itself out.

Pipe ruptures at the plant also spilled hydrocarbons into the sea, polluting about 750,000 sq m.

The plant is the largest of Tupras's four refineries. Other units shifted to full capacity to meet demand, and products imports were increased.

Asset sales

The earthquake was a setback for the state Privatization Administration, which owns 96.4% of Tupras.

After the quake, Turkey announced it would delay the sale of some state assets by at least 3 months. The nation is counting on revenues from the sales to reduce its budget deficit and cut inflation.

The government postponed the public tenders for several Tupras refineries and other businesses until early 2000.

Turkish officials said that, although the earthquake didn't seriously damage the assets of the companies to be sold, both domestic and foreign investors would be wary until the costs and impacts of the earthquake become more apparent.

Only the sale of Petrol Ofisi, Turkey's largest gasoline marketer, will proceed this year. Turkey was offered $1.16 billion for its Petrol Ofisi interest last year in a public tender, but the sale was canceled because of corruption allegations.


There was no reported damage to pipelines from the earthquake, although a power failure shut down a line carrying Iraqi crude oil through Turkey for several hours.

Analysts said the Izmit earthquake should not affect the various major pipeline projects proposed for Turkey, although the government's attention will be diverted for some time.

U.S. Energy Sec. Bill Richardson was in Turkey at the time of the Izimt earthquake to promote construction of a $3.5 billion Caspian oil export project.

That line would move oil from Baku, Azerbaijan, to Ceyhan, on Turkey's Mediterranean coast. The U.S. favors the project because it would be an alternative to exports through Russia or Iran.

Analysts say that, if the U.S. government weren't so committed to the Ceyhan pipeline, it wouldn't even be under consideration until substantial additional reserves are found in the Caspian region.

The question is whether support for the line will still be a major priority for the Turkish government in the coming months.