Turkey’s Energy Market: New Opportunities and Challenges

01.28.16
RIA Novosti
World News /28 Jan 2016
01.28.16

Turkey’s Energy Market: New Opportunities and Challenges

Turkey has an increasingly complex relationship with Russia, as the two share disagreements over Syria. Many countries including Russia and Saudi Arabia have sustained hits to their economies due to the fall of oil prices and the lifting of the sanctions on Iran will further impact their economies. Considering these recent events, now, more than ever, it is important to examine Turkey’s role in the global energy narrative.

Turkey needs to secure its energy supply through diversification. It has only the domestic resources to sustain twenty-six percent of its energy needs according to ORSAM’s recent “Review of Regional Affairs.” In most energy sectors, Turkey has successfully diversified its supplies; however, natural gas remains bottlenecked.

Russia is Turkey’s dominant natural gas supplier through the Russian company Gazprom. Fifty-five percent of Turkey’s natural gas is imported from Russia, which has created a bilateral economic trade deficit ranging from $15-20 billion annually for Turkey.

One of the issues raised following the downing of the Russian jet in November 2015 was Turkey’s high dependency on Russian natural gas which Russia has repeatedly used to pressure its neighbors.

In another attempt to create energy security, Turkey has become a leader in using renewable energy. According to Turkey’s Ministry of Foreign Affairs, “Turkey ranks seventh in the world and first in Europe in terms of geothermal energy.” Right now, renewables account for eleven percent of Turkey’s energy needs.

Turkey has one of the fastest growing energy markets in the world. The increased demand for electricity and natural gas over the past decade has only been rivaled by China. Its energy imports have increased over two hundred and ten percent since 1990, and domestic energy creation has boomed well over one hundred and twenty-five percent. With an increase in energy demand comes a new set of energy challenges for the country. Although it has limited resources, it has an abundance of opportunities to reach its energy goals.

Turkey has begun to work with Azerbaijan on the Trans Anatolian Natural Gas Pipeline set to be completed by 2019. This pipeline would mean an increase in natural gas from the Shah Deniz gas field in the Caspian Sea. This would diversify Turkey’s natural gas imports. Despite this progress, natural gas pipeline negotiations are continuously stifled due to international politics. Accelerating natural gas diversification remains one of Turkey’s greatest energy challenges.

(Pixabay)

(Pixabay)

Turkey has also begun to work with EU partners to further its use of renewable and domestic resources like hydro, wind and solar energy. It envisages producing thirty percent of its electricity needs from renewables by 2023. This goal created with the European Bank for Reconstruction and Development (EBRD) according to The Middle East Magazine would add 34 GW of hydropower, 20 GW of wind energy, 5 GW of solar energy, 1 GW of geothermal and 1 GW of biomass; it would also have ten percent of its transport sector needs met by renewable energy all by 2023.

Europe has also financed many of Turkey’s renewable energy initiatives including the hiring of the US-based company Deloitte consultancy to work with the Ministry.

Nuclear energy is also a new resource coming to Turkey, as a reactor to be built in Akkuyu should provide some relief to the increasing demand for energy. Turkey’s geographical location is key to energy security in Europe. It is a hub for oil supply to Europe, the Caspian region, and the Middle East.

Turkey has taken advantage of its strategic geopolitical placement between big energy suppliers and the West. Although it has always been a strategic player in oil transport, the creation of the Trans Anatolian Natural Gas Pipeline would also make Turkey a hub for natural gas as this pipeline should supply Europe’s natural gas from Azerbaijan. In a joint statement released on January 25th, following high-level talks between the EU and Turkey, the EU named Turkey as a crucial partner for EU energy security and energy diversification. The EU and Turkey will again meet on January 28th in Ankara for a High Level Energy Dialogue Meeting and again in April 2016 for a High Level Economic Dialogue Meeting.

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