The European Investment Bank (EIB), the European Union's financing institution, is advancing a EUR 90 million loan to the Turkish National Oil and Gas Company for the establishment of Turkey's first major gas storage facility.

This is the first EIB operation under the new "Special Action Programme", which makes available financing for up to EUR 450m during 2001-2004, in favour of a key Investment in Turkey's Energy Sector.

The project, which will provide about 1.9 Giga cubic metres of working gas capacity, concerns the conversion of two depleted gas fields, one onshore and one offshore, located in the Thrace region near the city of Silivri, some 60 km west of Istanbul, into an integrated gas storage facility.

There are currently no gas storage facilities in Turkey, other than storage tanks of limited capacity located at an LNG terminal across the Bosphorus from Istanbul.

The main purpose of gas storage is to match seasonal demand fluctuations (winter demand for gas is more than twice the summer level in Turkey) with supply given an optimal, usually constant level of imports and production.

Winter demand is currently met by interrupting supply to large industries and power plants that can use alternative, but more expensive and more polluting fuels. This project will therefore reduce national fuel costs and overall CO2, SO2 and NOx emissions, contribute to the rational use of gas infrastructure and provide a degree of supply security in case gas imports are temporarily disrupted.

The European Investment Bank finances capital investment furthering EU integration, in particular: regional development, trans-European networks in transport, telecoms and energy, industrial competitiveness and integration, small and medium sized enterprises, environmental protection, energy security, and health and education projects. It also operates outside the EU within the framework of the EU's co-operation external policy. Owned by the EU Member States, the EIB raises its funds on capital markets (AAA issuer).

In 2001, loans totalled EUR 36.8bn, of which EUR 31.2bn to EU Member States. Lending in the Mediterranean Partner Countries rose to a record figure of EUR 1.5 billion, confirming the EIB as the major player in the economic development and stability of the region.

Since 1995, the EIB has contributed about EUR 1bn projects of key importance for the Turkish economy. Infrastructure projects financed in Turkey include: the wastewater and effluent treatment systems in Adana, Diyarbakir, Izmit, Mersin and Tarsus; the desulphurisation equipment at the Yeniköy power station on the Aegean coast and the construction of more environment-friendly power and heating plants.