Turkey’s Challenges and Opportunities as a New Energy Power
Turkish Heritage Organization’s roundtable discussion highlighted the issues surrounding energy in Turkey including dependency, diversification, and becoming a hub.
In 2015, energy security was at the heart of geopolitics and international relations pertaining to Turkey and its surrounding neighbors. The instability in the Middle East along with the Eastern Mediterranean has created a fragile energy dependent region that heightens Turkey’s central importance as a leader in energy politics. Turkish Heritage Organization (THO), held a roundtable discussion on Turkey’s role in global energy politics in 2016.
Douglas Hengel, former Assistant Secretary of Energy, Sanctions and Commodities and current Senior Resident Fellow at the German Marshall Fund, David Livingston, Associate at the Energy and Climate Program at the Carnegie Endowment for International Peace, and David Romano, Associate Professor of Politics and Government in the Middle East at Missouri State University informed the audience on energy policies and practices in Turkey and the surrounding region.
Turkey’s Reliance on Russia
One third of Turkey’s energy comes from natural gas; the majority of its natural gas comes from Russia. Natural gas demand is expected to increase by 33% in the next decade. As Turkey aims at increasing its energy supply, it does not plan on decreasing the amount of energy it receives from Russia. Instead, it hopes to lower the percentage of its energy needs it receives from Russia by expanding energy imports from other places. Natural gas is the main fuel in Turkey as it accounts for one third of its energy supply, and more than half of this supply currently comes from Russia.
Hengal mentioned that Russia is also vulnerable in losing Turkey as an energy buyer. Perhaps this is why not much changed after Ankara shot down a Russian jet. Furthermore, cutting off energy supply to Turkey would reinforce the message to Europe that it needs to diversify its energy supply. Meanwhile, Gazprom wants to increase its supply to Europe through such projects as Nordstream 2 and OPAL.
One of the main issues with diversifying natural gas supply is that pipelines must be built. Therefore, diversifying natural gas supply is much more complex than diversifying oil supply. Ramano urged, “You must plant lots of seeds if you want energy because some seeds will not sprout.”
Turkey as a Gas Hub
Hengal stated that Turkey has to have a different energy structure if it would like to become an energy hub. Legislative reforms are underway to increase competition; however, these reforms are slow moving and not assured at this time. Hengel asserted, “If Turkey wants to be considered an energy hub, it has to have a different structure of the market than they today.” Livingston echoed this sentiment. The Trans-Anatolian Natural Gas Pipeline (TANAP) currently under construction is a good start to making Turkey a hub; natural gas would run from the Caspian Sea in Azerbaijan through Turkey to Italy releasing energy along its route. This source of energy must also be reliable in order to be successful.
Livingston did not believe it would be possible for Turkey to become a true energy hub until after 2025, possibly 2030. The key for Turkey will be to transition from a formative hub to a mature hub with highly liquefied gas and a liberalized energy market.
Turkey’s Expanding Energy Market
As Turkey’s energy market expands, it will need to find new sources. One of the best untapped energy sources is located in Iran. In fact, the amount of Turkic people in Iran already links the two countries said Livingston. However, the panelists were divided on whether these natural gas reserves could be a serious source of energy for Turkey. Hengal was convinced that natural gas from Iran would primarily be used to power oil extraction within Iran. Furthermore, Iran seems to be concentrating on completing LNG export facilities, making it unlikely to concentrate efforts on its natural gas reserves.
Ramono noted that Turkey not only needed to expand its energy supply, but it also needed to find energy at a reduced cost. Turkish neighbors, therefore, would be the best suppliers of energy. Therefore, Iraqi Kurdistan is one of the best options for Turkey. In fact, prior to the shooting down of the Russian fighter jet, Turkey was already working with Iraqi-Kurdistan to increase energy trade. The largest challenge with Iraqi-Kurdistan is the reliability of supply in an unstable region.
The final region the panel discussed with the Eastern Mediterranean. Specifically, Cyprus and Israel could be future energy suppliers for Turkey. However, it is unclear if Cyprus truly has discovered substantial amounts of natural gas, and the Cyprus issue, an island divided and disputed, would have to be resolved. In Israel, energy policy has not been developed. Although Noble Energy, an American company, hopes to work with Israel to export its natural gas, no political discussion has taken place to determine where this energy would go or if production could begin.
The overwhelming feeling across the panel was positive. Although Turkey faces many challenges in diversifying its energy supply, becoming an energy hub, and expanding its energy market, there are many opportunities for the country. Turkey’s expansion is positive as the region develops and could become a major player in the global energy realm.