Land in Turkey

Tending their flock or farms is no longer the major occupation of villagers around Ceyhan, set to be Turkey’s and the surrounding region’s energy hub with investments in refineries at this junction of oil pipelines. Villagers, already rich after selling their land to investors, nowadays spend their time at the tea house to contemplate their own investment strategies

MEHMET NAYIR
ADANA - Referans


Turkey's efforts to create a regional energy hub in the Mediterranean town of Ceyhan, at the end of the Baku-Tbilisi-Ceyhan oil pipeline (BTC), have already created riches beyond measure for local villagers, who have so much money that they are at a loss about how to spend it.

Investors are trying to capitalize on the fact that despite the huge amount of oil flowing into the region, and with even more planned, there is no oil refinery in the area.

Ceyhan is a bustling town in the province of Adana, the fourth-largest province in the country. Turkey has aspirations to become a regional energy hub through Ceyhan. The Baku-Tbilisi-Ceyhan (BTC) oil pipeline, the Iraq-Kirkuk-Yumurtalık pipeline, the Delta Petroleum Storage Terminal, the Sugözü Thermal Power Plant and the Toros Fertilizer Industry are of key importance to Ceyhan's economy.

With the BTC, a huge volume of refinery, storage facility, petrochemical, shipyard, port, and iron and steel investments are expected to flow into Ceyhan. And efforts by international consortiums to establish three petroleum refineries in the region are still ongoing.

Since 2000, land prices have increased 40-fold in the surrounding area, with villagers, who own around half the land and share ownership of the rest with the state, getting used to haggling with oil conglomerates over millions of dollars.

Lands that could not fetch YTL 2,000 per 1,000 square meters a decade ago are now going for YTL 80,000 per 1,000 square-meters.

One local, Celil Kırgız, 81, from the village of Sugözü, said he recently sold a stretch of land for YTL 1.6 million, which his son corrects to YTL 3.1 million.

“I still have lands to sell,” said Kırgız.

Kırgız's neighbor, Erol Seyhan, recently rejected an offer of YTL 3 million for his land, noting, “It's not a big amount of money these days.”

Seyhan believes he can get YTL 4 or 5 million for his 60,000-square-meter plot.

Celil Gırgır, the “muhtar” (village headman) of Ceyhan's Sugözü village, said a total of YTL 25 million was spent on land in recent times, including the sales in surrounding villages.



Locals both happy and a bit uneasy:

Ceyhan is on its way to become the world's energy investment center thanks to recent investments in petroleum refineries, pipelines and storage facilities in the area.

Currently, an average of two million barrels of oil flow into the area. With the completion of yet another pipeline project connecting the Black Sea province of Samsun to Ceyhan and the increase in the capacity of the BTC, the amount of oil transported to the region is expected to reach five million barrels by 2015.

Strolling through every corner of the area, energy companies are now looking for land to purchase. Estimates show Ceyhan owns a potential of 10 million square meters of land suitable for refinery establishment. Half of this land is owned by the villagers. For the rest, ownership is shared between villagers and the Treasury.

A short tour of the villages around Ceyhan provides a good chance to see the present excitement among the villagers.

Land prices and the money earned through sales are often the main topic of conversation at village tea houses.

Locals are now experts on energy issues, following all developments in newspapers, television and other mediums. The most up-to-date stories are shared by all, while they are very tight-lipped when it comes to bargains and deals they make with investors.

As a matter of fact, villagers in Ceyhan have already become genuine experts on the issue. They even have a broad knowledge of its legal aspects. Nationalization, land rights, loans, land registry and all other issues are often the main points of their chats at village tea houses.

Winning land deeds at court more difficult:

A group of locals interviewed in a village tea house in Ceyhan said, our eyes are wide open. We are following what is going on around us minute by minute so that we can have tough bargains with investors looking for land in the area.

Villagers say everyday a different company representative knocks their door. But, while earning such high amounts of profit leaves a big smile on their faces, it has also created an uneasy feeling among these villagers.

Just like the lucky guys who hit the jackpot in the national lottery, they refrain from speaking much about what they have sold, how much they have earned, and how much money is left. This is why they have not made remarkable changes in their life standards. And living frugally all their lives, they just don't have the mentality for spending a lot of money.

Kırgız said he still has a lot of money left over from the sale. He only purchased a car for YTL 45,000.

Another local of Sugözü village, Musa Başak, said, “I sold a part of my land at YTL 2,000 per 1,000 square meters to İsdemir, a company that made a couple of investments here in 1999.”

Başak now seeks to sell his 20,000-square-meter share in the area. But first he needs to win a legal war to get the full possession of those lands. “In the past, refinery investments were not on the agenda and it was easy to win the title deeds of lands at the court. But it is difficult now. The court actions I have been involved since 2004 are still continuing. They are currently at appeal,” said Başak.



‘Red land' the favorite:

The rapid increase in land prices has also forced investors to look elsewhere.

Situated near the sea and at close distance to the port, a 3,500-square-meter area owned by the Turkish State Railroads (TCDD) is seen as the most appropriate plot for a petroleum refinery investment.

Called “Kızıl (Red) Land” by the locals, this land was purchased by the Kızıl Group, owned by Mehmet Öz of Kızıltepe (Red Hill), from the State Railroads in a tender opened in 2005. But the tender was later canceled due to the group's ties with Massoud Barzani, leader of the Kurdistan Democratic Party (KDP).



Largest oil depot in the Mediterranean:

The Delta Petroleum Company, one of the biggest investors in Ceyhan, has been operating in the region for 20 years.

The latest investment it has made in Ceyhan is an oil storage depot that cost $100 million.

Delta's Chief Executive Officer Mehmet Habbab said they had established the largest oil storage in the entire Mediterranean region. “We have spent $100 million for that storage depot that will have a capacity of 650,000 tons in the second half of this year. In 2010, the capacity will be increased to 1,000,000 tons. $45 million of the expenditure is financed by the loan that the IFC Credit Corporation supplied. The rest came from our own resources. When the project is completed, Turkey will be the owner of the biggest independent oil product storage terminal in the whole Mediterranean region,” said Habbab.

With this latest investment by Delta, the fuel trade volume in Ceyhan will increase 23-fold. The company's current storage capacity is 300,000 tons. Once the trade volume increases, employment will increase, said Habbab. “We strongly believe that Ceyhan will be an energy center. About 300 million tons of oil will flow to the region in 2012. Ceyhan's future is very bright.”

For Habbab, two refineries would suffice for Ceyhan. “This area can only support two refineries. No need for any more. They will not be able to find enough oil for more than two refineries.” He also noted that the villagers' lands were not large enough for refineries, noting that the state would have to allocate more land for the projects.



Investments to be made in Ceyhan

Investments in the region were largely triggered by the construction of the BTC pipeline.

Construction work has begun in the Black Sea region for the Samsun-Ceyhan pipeline project that will cost $1.5 billion.

Although the OMV-POAŞ and SOCAR-Turcas consortiums separately applied to the Energy Market Regulatory Authority (EPDK) to establish a petroleum refinery in Ceyhan and reached the final stage of obtaining a license, another investor, the Çalık Group, appeared, and through a consortium with the Indian Oil Corporation, it obtained the license for establishing a refinery in the region.

The Zorlu Holding Energy Group is preparing to make its first wind energy investment in two districts of the neighboring Osmaniye province. Composed of 54 windmills, Zorlu's investment will be completed within 18 months. The cost will be 300 million euros. The total power generated will be 135 MV.

Hay Navigation rented about 500,000 square meters of land in the region to build a shipyard.

The Istanbul-based Akdeniz Naval Construction Company that signed a contract to establish a shipyard on a 80,000-square-meter area in the Adana-Yumurtalık free zone has started earth-moving works.

Large-scale energy and refinery investments have reached $20 billion in total in the Ceyhan region.

If these projects become reality:

Ceyhan may become a global energy center if all these projects come to fruition. By the time the 555-kilometer Samsun-Ceyhan pipeline project, which will carry oil from the Caspian Sea, Kazakhstan and Russia, is completed, one in every 16 barrels of oil sold in the world in 2010 will be passing through Turkey. Therefore, Turkey will be a key country in the Eurasian energy corridor.

With the shift of residual oil and tanker traffic to the region, the burden on the Bosporus and the Dardanelles will be eased.

The petroleum resources of the Caspian Basin will provide a welcome alternative to Middle Eastern oil for European consumers. It will allow European Union countries to diversify their energy imports.
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