Don’t confuse an ‘energy crossroads’ with an ‘energy hub’

Over three days last week, powerful figures held forth at the Black Sea Energy Economic Forum of the Atlantic Council. Turkey’s Recep Tayyip Erdoğan renewed warnings against terror. Afghan presidential hopeful Ashraf Ghani offered a vision of his country as the world’s largest producer of iron and copper. Iraq’s Kurdish leaders, including Kurdistan Regional Government Prime Minister Salih Barham, turned heads with the assertiveness of their independent energy policy.

It was a dizzying set of meetings, panels and speakers and more than a few headlines emerged: impressive even by the standards of an Istanbul that has become a hub of high-profile conferences in recent years. But to my mind the most interesting discussion of all, held on the sidelines and attended by no more than 30 people, was the one that asked the critical question about energy transit: So what?

“You can’t just decide to be an energy hub,” said Professor Alan Riley of London’s City University, challenging what so many seem to sort of take for granted. “At the moment, it’s a crossroads, not a hub.”

The discussion turned largely on the challenge of developing energy markets in Turkey. Unless a financial and trading infrastructure follows the bevy of planned pipelines and transit ways, it sort of adds up to assumptions that the mighty flow of the Bosphorus through Istanbul will make Turkey a maritime power.

Batu Aksoy, the CEO of Turcas Petrol, underscored the good news of pending legislation designed to enable creation of “a spectrum of investment vehicles” including spot trading in oil, gas and electricity as well as futures contracts and even carbon emissions credits. By the beginning of mid-2012, Turkey can begin to play in southern Europe a role analogous to that played by Germany in northern Europe: making deals, setting prices and really driving the regional energy economy.

Hüseyin Erkan, present CEO of the Istanbul Stock Exchange, saluted the vision but issued a note of caution. Turkey already has 105 commodity exchanges across the country, but lack of bonded warehousing and proper regulation means less than 1 percent of Turkish commodities trade on those exchanges.

John Roberts, an analyst with the U.K.-based energy consultancy Platts, suggested that Turkey’s mentality toward being a transit country must change; collecting tolls from those passing through is fine, but actually becoming an actor in energy is something that will require a public and private initiative not yet apparent.

It’s hardly a topic like well-named Nabucco, the theoretical gas pipeline long planned and debated between the Caspian Sea and Europe. It can scarcely compete for drama with Iran and her nuclear ambitions. It is not an issue one can bracket with “Great Game” theories of geo-politics. In short, debate on local energy markets and exchanges is hardly the stuff of passion and emotion.

But it is the stage on which all the anticipated drama will inevitably play out. At the moment, it simply does not exist.

Too bad we can’t find a way to have a stirring debate on this issue. Without it, much of the brave “energy corridor” rhetoric to which we have become accustomed in recent years will remain just that: rhetoric