Turkey’s energy game is only just beginning
SERHAN ÜNALDevelopments over the last few months, particularly Russian President Vladimir Putin’s recent visit to Ankara, have paved Turkey’s path to becoming a regional energy center. Indeed, this is more like the utilization of the idle capacity that Turkey has. In this sense, the country seems to be starting the year by translating its full potential into actual energy influence, playing the energy game better. If it maintains its current ambitious strategy to develop the necessary physical, ideational and institutional capacity, 2015 could be the key year.
Turkey has been urged by its Western partners to explore ways to facilitate energy projects in the East-West axis since the 1990s. In a heuristic way, Turkey has come to understand the significance of international energy projects around it and has gradually transformed its foreign policy in a way to maximize the benefits of its geographical position. Until now, Turkey has achieved much to enlarge its opportunities to become an energy center. On the other hand, Turkey’s real potential seems bigger than that already realized so far.
In terms of gas, after the introduction of Russian gas into Turkey in 1986, there were not many developments until the arrival of Iranian gas in 1996 and the construction of Blue Stream in 1997. All three of these projects targeted the Turkish domestic market, rather than enabling Turkey to use its potential in energy geopolitics. However, developments in recent years have made it more achievable for Turkey to build itself up as a regional gas hub. This was also the main reason for the EU to maintain its energy relations with Turkey within the “positive agenda.”
With Putin’s visit to Ankara, the decision to replace South Stream with a new pipeline passing through Turkey, Ankara now has a better hand in its energy relations with the EU. Turkey’s hand will be further strengthened with the completion of the Arbil-Ceyhan gas pipeline and the TANAP in 2017 and 2018, respectively. Only after the completion of these projects will Turkey start to evolve into an energy center in the East-West axis. In a self-triggering way, a stronger Turkish position in the equation will also help it resist vis-a-vis the Egypt-Cyprus-Israel alliance in the Eastern Mediterranean. It is very likely that the more Turkey integrates the interests of international energy companies with its own, the more easily it will be able to stand up against Cyprus’ provocative policies in the region.
When it comes to oil, one of Turkey’s earliest achievements was the Kirkuk-Yumurtalık pipeline, which has practically operated below capacity since the Gulf War. Another example is the BTC pipeline transporting Azeri oil to the Ceyhan port on the Mediterranean shore via Georgia, which started operations in 2006. Moreover, Turkey administers one of the world’s oil transit chokepoints, the Turkish straits, through which nearly 2.5 percent of the global oil supply was transported in 2013. Lastly in 2014, a new pipeline transporting Iraqi oil to Ceyhan considerably strengthened Turkey’s position to host a new kind of “Turkish blend” in global oil markets. With the rapprochement between Baghdad and Arbil, Turkey could have more opportunities to attract more Iraqi oil to Ceyhan to empower its position. Also, Turkey’s increasing refinement capacity will create the chance to supply the entire region with petroleum products when the new refinery in İzmir is completed in 2017.
In addition to its developing physical infrastructure, Turkey maintains a coherent free market policy that both increases Turkey’s attraction for foreign investors and, by its nature, supports the Turkish strategy to become an energy center in return. The well-established electricity market structure and deepening liberalization in gas increasingly attract more international players. By benefiting from the partnership with these companies and from the experience gained during this process, Turkey has already started to push the limits of its horizon in the game in ideational terms. Joint ventures in a number of countries and the steadily increasing oil and gas exploration budget are proof of this.
Similar to promising successes in physical infrastructure, the establishment of required institutions is another aspect of Turkey’s success. An independent energy regulator has been in force since 2001, and soon an energy stock exchange (EPİAŞ) will be fully operational to further deepen Turkey’s position as an energy center where energy is bought and sold globally. To fully benefit from EPİAŞ, Turkey also needed to enlarge its agenda-setting capabilities to affect energy investors. As such, an energy news terminal of Turkey’s official news agency serves energy news globally and helps to spread the Turkish perspective. Institutional widening is continuing not only at the state level but also at the non-governmental level. In 2012, the first energy think-tank of Turkey was established to serve energy companies and decision-makers in the business and policy areas. Initiatives like energy think-tanks and energy news agencies both contribute to Turkey’s agenda-setting capabilities and significantly reinforce Turkey’s ideational infrastructure.
To recapitulate, although Turkey still has some idle capacity in energy geopolitics, new projects like the “Turkish Stream” provide it with strategically needed energy supplies and popularity. With the development of not only physical infrastructure but also ideational and institutional infrastructures, Turkey will increase its chances to gain more in the energy game, which is entering a new phase in 2015.
*Serhan Ünal is a senior researcher at the Turkish Energy Foundation (TENVA).