The fate of the Turkish Stream and the future of Turkey’s energy supply security
Rüçhan KayaAs Winston S. Churchill once said, “Safety and certainty in oil lie in variety and variety alone […] on no one quality, on no one process, on no one country, on no one route and on no one field must we be dependent.” Being dependent on Russian natural gas with a 54.76 percent share of Turkish domestic consumption, of all the countries around the world, Turkey should be thinking about this quote nowadays.
During the harsh days of winter, Turkey occasionally suffers from gas deficiency in the market due to very high household demand. So far, Turkey has been dealing with this problem by cutting the industrial consumption levels, using its existing small gas storage capacity and asking suppliers for additional gas.
Although it is unlikely for Turkey to have gas supply problems since it has long term, internationally binding contracts with its suppliers, any event that can lead to gas disruption could cause trouble for the country. In 2009, this happened because of a conflict between Russia and Ukraine, eventually leading Russia to push for the South Stream, and now the Turkish Stream, bypassing the conflict ridden Ukraine. However, the recent rising tensions not only endangered Turkish Stream but also raised the questions about uninterrupted supply at times of high gas demand in winter.
Although there are no short term solutions to gas flow interruptions, Turkey should be taking steps to reduce risks that are associated with its energy supply security. In order to do so, the country should pursue diversification of its supply instead of increasing its reliance on single supplier countries. There are a few ways to achieve diversification and reliance on Russian gas: boosting gas supply from alternative suppliers, either through building additional pipelines or LNG terminals, increasing the share of renewables in electricity generation and investing in energy efficiency.
Among these long term solutions to emerging risks of energy security, Turkey is already working towards diversification of its suppliers. For instance, TANAP is scheduled to carry Caspian natural gas to the Turkish and south European markets and starting from 2019, six billion cubic meters (bcm) of natural gas will flow. However, the Caspian is hardly an alternative to the 27 bcm imported from Russia. Other than the long term alternative projects to carry Turkmen, Northern Iraqi and Eastern Mediterranean gas to Turkey, another alternative is to build additional LNG terminals. Currently, Turkey only has two LNG terminals, lacking import capacity and infrastructure to deliver it in times of high demand.
Still, the aforementioned solutions can become meaningful only if Turkey achieves to liberalize its domestic gas market. Without liberalization of gas import (currently only around 20 percent) and unbundling of BOTAS, additional LNG terminals will not be viable for private companies to take part and Turkey will continue to experience gas shortages as well as instances of market inefficiency.
Russia aims to start pumping gas through the Turkish Stream by the end of 2017, yet given the current issues between the two countries, this might not be a realistic target. Regardless of the fate of the Turkish Stream, Turkey should start evaluating how it can alleviate its reliance on Russia instead of proposing to receive more gas through the Blue Stream and putting its energy into the Turkish Stream instead of pursuing supply. Diversification has been identified as an important component of energy policies of importing countries since Churchill’s days and it is considered to be the most familiar principle of energy security.
Rüçhan Kaya is a research fellow at Hazar Strategy Institute (HASEN).