Ceyhan or Singapore: which one to be the 2nd Rotterdam?

Ceyhan or Singapore: which one to be the 2nd Rotterdam?

It was 2011 when I visited Rotterdam and held a long tour in one of the world’s largest ports. And that was the moment when I understood what Turkish officials meant by saying the Turkish short term goal was to turn its Ceyhan port into the 2nd Rotterdam; meaning, to make it one of the world’s most important energy hubs which would also increase Turkey’s role in the energy world.

Ceyhan is the port through which Azeri and Iraqi oil are flowing to the international markets and also has a refinery to produce petro-chemical products to both use in the domestic market and to export to foreign markets. The idea was to increase the importance of the Ceyhan port after securing the flow of Russian oil through a pipeline to be built from Samsun (which could never be done). The Ceyhan oil terminal is already serving as the port for Azeri oil flowing through the Baku-Tbilisi-Ceyhan route and Iraqi oil through the Kirkuk-Yumurtalık oil pipeline. The terminal also has a refinery and LNG terminal in order to enhance the port’s role as a future energy hub.

Turkey is not an energy-source country, but is well-known as a consumer country whose dependency on foreign sources is already around 80 percent. Russia is the main supplier of natural gas to Turkey, while Iran and Azerbaijan are meeting Turkey’s oil supplies. It’s very much understandable for a country like Turkey which is not self-sufficient in terms of energy resources to become an energy hub.

So it is for Singapore.

“Singapore wants to become an energy hub. They are seeking to be Asia’s Rotterdam,” said to me by Dr. Fatih Birol, chief economist at the International Energy Association, on the sidelines of Singapore Energy Week, an annual venue for the world’s most important energy players. Singapore is one of the rising economies in the word, aspiring to be the financial and energy hub of the Asia.

“In the past, we only talked about China. Then came India. And we have started to talk about China and India. And now we have China, India and ASEAN countries. Two thirds of global energy demands come from this region,” explained Birol, in his address to the conference. It makes crystal clear why Singapore, one of the region’s most developed country, is aspiring to become the regional energy hub.

We, in Turkey, are not much aware but Singapore is one of the most geographically strategic countries in the world. Situated on one of most important trade routes, Singapore is well-known with their expertise in trade and commerce. It’s only natural to see how Singapore is readying itself for the position of the 2nd Rotterdam.

But how to become the 2nd Rotterdam? Netherlands’ port is the fourth biggest in the world with its 170,000 tankers carrying goods worth more than $400,000,000. The port is 40 kilometers long with plenty of canals, harboring tankers from all over the world. The administration is still spending $2 million a day to keep its goal to be number one alive.

Singapore’s Minister of Trade and Industry S. Iswaran told the conference that his country was seeking to diversify its energy sources and explained that the Liquefied Natural Gas (LNG) terminal commenced its operations in May this year, with an initial throughput capacity of 3.5 million tons per annum (Mtpa).

This will increase to 6 Mtpa at the end of this year with the completion of a 3rd tank, adding that they have also announced plans to expand the terminal by adding a 4th tank, which will boost the capacity to 9 Mtpa by 2016.

Just to make a comparison: Turkey has six refineries with a capacity of about 800,000 barrels of oil per day while Singapore has a capacity of about 1.4 million barrels per day.

Singapore and Turkey are two different cases. But it seems they have both similar objectives, although they are in different corners of the globe. According to Birol, the future of Asia will still be dominated by fossil fuels and the main picture will not be drastically changed. Given the fact that many countries in the region do not have enough subsidies and supports solar or wind power, it was getting hard for Asian people to stay away from coal and other conventional energy resources as they are still the cheapest energy source.

According to Birol, the center of gravity in terms of energy demands and markets is moving towards the east. Asian countries will continue to be the most important energy importers in the world. That’s why recent political development in Iran and Iraq are followed quite closely.

Turkey obviously needs to do more to become a regional energy hub, as Asia’s growing economies are also looking at how to do so. Linking source countries of the east to consumers of the west, Turkey still can go ahead with its ambition to become en energy hub, but it obviously requires a more concrete and implementable energy policy.