Turkey vying to be energy hub, but how?
Posted by meb at April 26th, 2008
A senior energy analyst from the US has said Turkey, as an energy corridor for Europe, can continue to side with the West or choose to look out for its own economic interests as energy continues to occupy a dominant position in foreign policy worldwide against a backdrop of dwindling hydrocarbon reserves.
Julia Nanay, country strategies director for Washington-based oil and gas consulting firm PFC Energy, said if Turkey wants to be a member of the European Union, it should do whatever Europeans feel comfortable with when bargaining.
“But if Turkey thinks no matter what it does it will not get into the EU, so why not play as tough as it can to get the best money possible, then it’s a different story,” Nanay said, speaking to Today’s Zaman yesterday at Forum İstanbul 2008, which brings Turkish and world leaders together to discuss current global developments and their effect on Turkey.
Europe’s vulnerability in terms of the risk posed by interruptions in energy supply has increased.
Nanay said Turkey can play a strong risk mitigation role for Europe and the opening of the 1 million barrel per day Baku-Tbilisi-Ceyhan (BTC) oil pipeline represents an historic connection to the Caspian basin.
Many observers say as the security situation improves, Turkey may become a key transit supplier of oil from Iraq. There are also numerous bypass projects to bypass the crowded Bosporus, intended to reduce the risks of shipping oil through the vulnerable strait.
“For the Europeans, Turkey represents an important link for energy security. That is something Turkey could use as its leverage. But it needs to be careful,” Nanay said.
Mehmet Öğütçü, a senior executive for British Gas International, said care is what is needed in Turkey. “If Turkey is playing for the role of an energy hub, it should not use pipelines as tools to get what it wants — as is the case with Russia, which uses its supply as a weapon. It’s not perceived well in Europe at all. Dependability is very important for Europe,” he told Today’s Zaman.
He said the issue of reliability has been more important with Nabucco, a planned pipeline that will transport natural gas from the Caspian and Central Asia via Turkey — avoiding Russia — to major natural gas hub Austria. Backed by the United States, the 3,000-kilometer and $7.5 billion project could source gas from Iran, Azerbaijan, Kazakhstan, Turkmenistan, Egypt and Syria and aims to diversify Europe’s imports of natural gas.
Turkish Foreign Minister Ali Babacan, who paid an official visit to the Russian capital on Feb. 19-20, said Turkey is open to the inclusion of Russian natural gas in Nabucco and Russian officials are reportedly assessing this proposal.
Some analysts say Nabucco should be combined with the South Stream project, a pipeline that would bring Russian gas to Bulgaria via the Black Sea before splitting into several branches to Western Europe, bypassing Turkey entirely.
Nanay said how Russia sees Turkey also plays an important role: “Turkey is a competitor to Russia if more Central Asian oil moves in Turkey’s direction. Maybe Russia already sees that and is trying to steer oil away from Turkey and [so] supports South Stream.”
The energy dimension represents the most significant aspect of the Turkish-Russian relationship. Turkey imports 65 percent of its natural gas and 20 percent of its oil from Russia. If current trends continue, Turkish dependence on Russian gas may reach up to 80 percent in the coming years. Turkey obtains natural gas from Russia through the Blue Stream, a major trans-Black Sea gas pipeline.
It is not only Turkey that has to come to terms with Russia. Nanay said the conflict is also over how the Central Asian countries decide they want to handle their relationship with Russia as alternative producers or suppliers of natural gas or oil: “For example, Turkmenistan has a low population that uses its natural gas resources, leaving it with a vast export capacity. But how Turkmenistan plays geopolitics, how much Russia offers to Turkmenistan to carry its gas are all important for the Turkmen leader to decide.”
Nanay said Turkey has allied itself with the US, backer of the major oil pipelines going through Turkey. “Turkey has already made a choice. Does it vacillate on that choice because gas represents something more? When it comes to gas, Russia creates more tension. As Turkey goes into being a gas corridor for the Caucasus, those tensions will escalate. Then Turkey really has to make a choice,” she added.
Turkey has also been discussing an energy deal with Iran, a country the United States has sought to isolate. Turkey is negotiating current supply terms with Iran as well as possibilities of setting up a framework for the export of Iranian gas through Turkish pipelines to European markets.
Half of Turkey’s power plants are fueled by natural gas and the country currently imports almost all its natural gas from Russia and Iran. Throughout much of January gas supplies from the latter were interrupted as Turkmenistan temporarily stopped shipping gas to Iran because of “technical problems.” Analysts say the real reason was that Iran refused to accept a price hike by Turkmenistan.
Öğütçü said the second half of this year will become critical for Turkey as the energy negotiation chapter with the EU opens in the European Council term presidency of France, whose leader, Nicholas Sarkozy, strongly opposes Turkey’s membership in the EU.
Global oil consumption amounts to 85 million barrels of oil each day. Production beyond 100 million barrels is not possible. Both Nanay and Öğütçü agree that a crisis point will be reached in the middle of the next decade, and Turkey needs to strategize in the difficult intervening years.
source: Today’s Zaman
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