Turkish economy to face challenges if oil prices rally: IEA head

Turkish economy to face challenges if oil prices rally: IEA head

Öykü Altuntaş - ISTANBUL / Doğan News Agency
Turkish economy to face challenges if oil prices rally: IEA head Turkey’s economy may face a challenging period in the event of an increase in oil prices, the executive director of the International Energy Agency, Fatih Birol, has said, while urging officials to take measures on their energy policies.

Turkey is among the countries which have secured some “positive effects” over the drop in oil prices but measures should be taken considering that “prices will not remain constant,” Birol, who is also a Turkish economist and energy expert told, Doğan News Agency (DHA) in an interview on the sidelines of the seventh International Energy and Climate Forum organized by Sabancı University Istanbul International Center for Energy and Climate (IICEC).

Birol listed countries in three categories, depending on how they were affected by the decrease in oil prices. Birol described the economies of Saudi Arabia, Russia and United Arab Emirates, which are mostly dependent on oil revenues, as countries which were “negatively affected” by the drop in prices, as their economies had “weakened” after the developments. He added that Nigeria, Azerbaijan, Venezuela and some other African countries had suffered “the most significant damage,” with many of their economies now going bankrupt.

‘Drop in oil prices an opportunity for Turkey’s current deficit’

Birol said Turkey was among the countries that were “positively impacted” by the fall in prices.

“The current account deficit in countries that import oil, including India, Turkey and Japan, have decreased to some extent. The fall in oil prices was a major opportunity for Turkey, whose economy has been going through a difficult time. However, it would not be realistic to figure that these prices, which were 30 dollars and recently reached around 50 dollars, would remain constant in the long term,” said Birol, who called for measures.

LNG a chance for Turkey

According to Birol, Turkey should take as much advantage as it can of the global wave of liquefied natural gas (LNG), which is expected to cost little. “A major opportunity fell into our lap,” he said.

Meanwhile, he urged that Turkey should “decrease its dependence on oil and natural gas, and search cheaper natural gas.”

“Turkey imports natural gas excessively from a certain country. It should diversify its sources, lower prices and encourage competition to achieve that. This would only emerge if Turkey turn toward other alternatives,” he said. 

Turkey could also import gas from the United States, Qatar or Canada, he added.

“If we seek alternatives and decrease economic costs, we would also get rid of the downsides of the dependence on a certain country, on a political basis,” said Birol.

Debates on Turkey’s “dependence” on Russia in energy importation were inflamed after Turkey downed a Russian jet near its border last year. The crisis was expected to cause gas cuts that would have had serious results for the Turkish economy, experts argued.

Natural gas imports total 54.76 percent from Russia

The consumption of natural gas in Turkey, which has the second highest demand for natural gas after China, increased by 120 percent, from 22.1 billion to 48.6 cubic meters, between 2004 and 2014.

Some 35 percent of Turkey’s overall energy consumption is met by natural gas, 29 percent by coal and 27 percent by crude oil. Natural gas is used predominantly in electricity production. 

Turkey’s natural gas production, which was 759 million cubic meters in 2011, declined to 479 million cubic meters in 2014. Thus, its dependence on natural gas increased from 97.5 percent to 99.04 percent between 2007 and 2014. Some 54.76 percent of Turkey’s natural gas imports come from Russia, while 18.13 percent comes from Iran and 12.33 percent from Azerbaijan.