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Page added on April 27, 2014

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Turkey to become global energy hub

Public Policy

Turkey has a good chance of becoming an energy hub if it maintains the gains it made in the last decade, Martin Raiser, country director for Turkey of the World Bank, said on Friday.

“Turkey has taken major steps in the past decade and nearly half of them were to implement independent regulatory institutions to strengthen the rule of law to improve business opportunities,” Raiser told Anadolu Agency during the International Energy and Environment Fair and Conference in Istanbul.

“It is very important for the government to restore the confidence that investors have in the quality of the regulatory framework and the independence of the regulatory agencies, whether it is the EMRA [Energy Market Regulatory Authority] in energy sector, or the BRSA [Bank Regulation and Supervision Agency] in the banking sector, or the Central Bank in monetary policy,” he said.

“These are absolutely critical achievements that Turkey has had, and shouldn’t give up. For the regulated energy sector, it is particularly important that everyone believes that regulatory agencies are independent and is not subject to political influence and takes even arms-length decisions with regard to market participants,” he said.

Turkey, dependent on energy imports with limited natural sources, established the EMRA in 2001 as an independent regulatory body to oversee oil, gas, electricity and other markets within the energy sector.

Turkey, in need of foreign direct investment, is trying to boost liberalization in energy market to attract investors and has seen an investment of 75 billion dollars in the energy sector since the foundation of the EMRA, according to unofficial figures obtained from the Energy Ministry.

The World Bank is currently working with Turkey’s Energy Ministry to reform the legislation of the natural gas market, which could allow Turkey to attract competing sources of supply for its domestic market and ultimately make it better-positioned to supply European markets.

Turkey is in a strategic geographical location “between major markets in Europe and major supply sources further east,” said Raiser.

The director said this geostrategic advantage increased Turkey’s chances of becoming a global energy hub, adding that Turkey’s geopolitical context required the resolution of some of the political issues around energy resources in the eastern Mediterranean basin and Iraq.

As part of its bid to become an energy hub, Turkey invested in the Trans Anatolia Natural Gas Pipeline (TANAP) to carry Azerbaijani gas to Europe. The recent discoveries of natural gas fields in the eastern Mediterranean off the coast of Israel have introduced an opportunity for Ankara as Turkey is the most feasible route for Israeli gas to reach European and Asian markets.

But the strained relations between Turkey and Israel over the Mavi Marmara incident in 2010 are expected to thaw as both sides have signaled possible reconciliation. Turkey is also attempting to meditate a resolution in Iraq between the central government and the Kurdistan Regional Government (KRG), which will allow Kurdish oil to reach Turkey for re-export.

The bank provided financing for the Baku-Tbilisi-Ceyhan pipeline, which carries Azerbaijani oil to Turkey.

Also, the bank management has recently prepared an analytical study on some interconnection of power systems between Turkey and the South Caucasus, and projects that may bring hydrocarbon resources from the South Caucasus.

“Most of the lending [to Turkey] in the last 12 months has been in the energy sector,” said Raiser. “The World Bank is particularly interested in Turkey to support renewable energy and energy efficiency. Both of them help Turkey save on its energy import bill, and at the same time it can [prevent] carbon emissions.”

The bank is also working with the Turkish Petroleum Pipeline Corporation (BOTAŞ) on building a natural gas storage near Tuzgölü in central Turkey. The project will help Turkey even out the natural gas market by storing gas in times of low demand and releasing it at peak demand, while also enhancing energy security by providing a surplus buffer.

The Turkish Electricity Transmission Company (TEİAŞ) is another customer for the bank in a project to expand transmission systems.

3 Comments on "Turkey to become global energy hub"

  1. J-Gav on Sun, 27th Apr 2014 7:16 am 

    Barring regional conflict, I’d agree there’s a fair chance of that happening. When and if it does the question then becomes: For how long?

  2. rockman on Sun, 27th Apr 2014 9:38 am 

    Some tough talk by Turkish politicians towards Russia: Russia’s seizure of Crimea is a harbinger of a new Cold War that leaves Turkey facing complex situations on a number of fronts, requiring careful diplomatic and political management. Whether Ankara can rise to the occasion given that the government of Prime Minister Erdogan is up to its neck in what it sees as a war of survival against its political enemies at home remains an open question.

    No matter how tense the domestic situation may be, though, this is not a crisis that Turkey can afford to ignore or overlook, even if its ability to influence the course of events is limited, if indeed it exists at all.

    Foreign Minister Ahmet Davutoglu has nevertheless spelled out Ankara’s “bottom line” as far as the legal position is concerned over the way Russia wrested the Crimean Peninsula from Ukraine’s control, and this is largely in tune with the position of the West.

    Davutoglu’s remarks reflect ambivalence with regard to Russia, a superpower Turkey cannot afford to alienate without ultimately harming its own strategic security and economic interests. Addressing a news conference in Ankara earlier this week with Mustafa Kirimoglu, the former head of the Crimean Tatar Mejlis (parliament) and now a deputy in the Ukrainian parliament, Davutoglu attempted to sound a firm note when he said the recent referendum in Crimea on the region’s status was a fait accompli that lacked legitimacy.

    Russia’s return to the Middle East — following what it sees as its major success in Crimea — as an even more assertive power than it already is will also affect Ankara’s policies toward the region. It is no surprise that Syria’s President Bashar al-Assad — Erdogan’s nemesis — is making no secret of his joy over developments relating to Crimea.

    Meanwhile, an anti-Western Russia that yields clout in the Middle East will also provide Egypt’s military rulers — who are the object of much vilification by Erdogan — with fresh options against the West should Europe and the United States pressurize them on the basis of democratic arguments.

    {And then there’s the practical reality behind the political rhetoric}:

    Reuters – Turkey and Russia have agreed to raise the capacity of the Blue Stream pipeline, which brings in Russian gas via the Black Sea, to 19 bcm annually from 16 bcm, Energy Minister Yildiz said.

    Turkey is due to start discussions later on Monday with Russia’s state-controlled Gazprom on a series of energy issues including gas price revisions, gas supply and nuclear power cooperation.

    Officials said Russia’s recent annexation of Crimea had created a risk for Turkey, noting that 12.5 percent of its gas supplies pass through Ukraine via the Western pipeline.

    Steps to prevent a potential supply problem will also be discussed with Alexander Medvedev, Gazprom’s director general of exports, who is in Ankara for the talks.

    “We have understood that with little tweaks the gas flow in Blue Stream could be increased to 19 bcm from 16 bcm,” Yildiz told reporters. “In principle, we have agreed on this with Russia.”

    Turkish gas demand has more than tripled since 2000 to almost 47 billion cubic meters, with further rises expected as both its economy and population grows. The country’s total energy bill is around $60 billion annually.

  3. Makati1 on Sun, 27th Apr 2014 9:52 am 

    The power of hydrocarbons will override the power of failing empires. Turkey is the only Muslim nation in NATO. A double bind, I think.

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