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19.03.2009

TURKEY: THE PROSPECT OF BECOMING INTERNATIONAL ENERGETIC CENTRE

   

Sargis Harutyunyan

According to the special report “Turkey’s Energy Strategy”1 presented by the Ministry of Foreign Affairs of Turkey in 2008, this country is in close vicinity of 72,7% of proven oil reserves and 71,8% of proven natural gas. Taking into account the well-known geographic advantages of Turkey it becomes clear which are the strategic objectives of that country.

Though in previous years there a lot of work was done to make Turkey the international energetic centre and the oil pipeline “Baku-Tbilisi-Ceyran” which was opened in 2006-2007 and “Baku-Tbilisi-Erzurum” gas pipeline and Turkey-Greece Interconnector are first of all to serve international projects, but there are serious reasons to believe that the main developments concerning that issue are still to come.

Even today there are several factors, which speak to the tangible growth of the role of the Turkey as the intermediary country in the international energetic system.

Mainly after the Russian-Georgian war and recent gas conflict between Russia and Ukraine European states began to take more seriously the idea of getting Middle East, Caspian and Central Asian utilities through the territory of Turkey. For example, in the issue of natural gas the Europeans suppose that they have three alternatives to Russia, i.e. Norway, Algeria and Turkey2, but even today it is clear that the first two are not simply able to supply the necessary amount of gas, so that it would efficiently lessen the dependence on “Gazprom”3. Meanwhile, in the line of Turkey they get the access to almost the half of the world’s proven gas reserves4. Of course, in the past the Turkish direction has also been topical for Europe but the new item is that now they reconsider the time schedule and we are still to see the new indices5.

The second important factor is the American-Iranian and European-Iranian negotiations and the end of the Iraqi campaign of the US, which is planned for 2011. In case if those two processes have a successful result European consumers may get the access to two countries (Iran and Iraq) with reach utilities. Together those countries possess 20,5% of world proven oil reserves and 17,5% of proven gas reserves6. But the point is that for Europe and the United States Turkey, in fact, is the only convenient option for the transportation of that oil and gas to the European Union and to lessen its dependence on Russia. For example the aim to reach the agreement in strategic sphere of energy must be regarded as one of the reasons of the current negotiations between the US and Iran. Energetic is the only sphere, perhaps, which creates an opportunity for serious agreements between Iran, the USA and Europe.

And finally, the third factor is the aspiration of Kazakhstan and mainly of Turkmenistan7 to enter western markets. Though till now Russia has managed successfully to keep its control over energy capabilities of Central Asian countries, one should not exclude that the “opening” of Iran will create an opportunity for the US and Europe to get to the energy resources of Central Asia. This is still insuperable factor for Washington and Brussels the Azerbaijani-Caspian and Pakistan-Afghanistan-Central Asia directions.

The aspiration of Turkey to become an international energetic centre is not restricted to mainly energetic or financial aims. It is not a mere chance that on January 2009 in Brussels during the talks with the spokespersons of the EU on the possible accession of Turkey to the European Union, the prime-minister Erdogan connected the issues of the expediency of the “Nabucco”, which will be built on the territory of Turkey, and the accession of Ankara to the EU.

Of course, the problem of “Nabucco” can hardly have any essential influence on the prospects of the accession of Turkey to the EU. It seems unlikely that Ankara pins its hopes on it. This step by Erdogan pursues the aim to show the approaches formed in the foreign policy of Turkey while relating with the countries, which import energy carriers and in the future with the countries, which sell those energy carriers; to use the opportunities offered to an intermediary country.

If we try to formulate briefly that innovation, then Ankara intends to bring the facilities of the country, which is an energetic center, to the level of geostrategic position and military and political capabilities, and this will only attach weight to the country in the regional and global relations. Though at present Turkey due to its inner capacities supplies only 30% of its energy demand and the pattern of the main energy carriers are as following:

table (original)

There are at least two directions where Turkey tries to take over the central role:

  • the import of the oil to the international markets
  • The supply of Near East or Caspian-Central Asian natural gas to the European Union

The decision of Ankara to initiate the development of nuclear energy, perhaps, at the initial phase will have a local significance8, but it should not be excluded that Turkey have a goal to take part in the electric power buy and sell in the Central Asian and Balkan markets, where almost in all the countries the economic growth dynamics can be observed.

Oil

One may say that Turkey has been involved in the sale of the “black gold” since the beginning of the 20th century, when the Caspian oil started to flow from the main oil terminal of the Russian Empire Batumi through Bosporus and Dardanelles to the international market. In the course of time the significance of the straits has grown and today that dynamics keep going. Thus if in 1996 60 million tons of oil were transported through Bosporus and Dardanelles then in 2006 the amount of oil constituted 143.4 million tons. It is expected that this year that number will vary between 190-200 million tons9.

But Ankara started to think about the role of intermediary country in the international oil market as far back as 1977, when “Kirkuk (Iraq)-Ceyhan (Turkey)” oil pipeline was opened. The usage of the pipeline was on the hold because of the war in Iraq in 2003. Later the usage of “Kirkuk-Ceyhan” had been interrupted for many times because of the attacks by Iraqi fighters. Though the technical feasibility of the pipeline allows supplying 1.6 million barrels of oil, but at the end of 2007 150-200 thousand barrels of oil were supplied to Turkish seaport Ceyran. In 2008 that number had grown to 400 thousand. In the near future, anyway, the pipeline can operate full out. On January 7, 2009 the minister of oil of Iraq Hussein al-Shahristani stated that they were going to post an international tender for 9 biggest oil pools and 2 biggest gas pools. According to the presented calculations, if those gas pools start to be used then daily oil production will rise from present 2.5 million barrels to 6 million barrels in 4-5 years. Under such conditions “Kirkuk-Ceyhan” oil pipeline will again operate full out.

As it is known, on July 13, 2006 in Ceyran the opening ceremony of “Baku-Tbilisi-Ceyan” oil pipeline, which had been built since the September 2002, took place. Though in August 2008 particularly because of Georgian-Russian war the pipeline had to suspend its work for about 20 days, since the beginning of 2009 it had again started to operate full out, providing 1 million barrels daily.

According to the memorandum of understanding signed by Italian “Eni” and Turkish “Calik Energy” energetic companies on September 26, 2005, the parties initiated the construction of “Samsun-Ceyhan” oil pipeline in 2007, which have to transit Russian and Caspian oil from Samsun Black Sea port to Ceyhan. According to the plan the pipeline will be ready in 2010 and its flow capacity will be about 1.5 million barrels daily.

In accordance with the agreements between the minister of energetic of Turkey Hilmi Guler and the minister of national infrastructure of Israel Binyamin Ben-Eliezer, the parties made terms about the negotiating on the construction of the oil pipeline from Ceyhan to Israeli seaport Haifa10. Though in recent period the relations between Turkey and Israel deteriorated and there is no information about the results of the negotiations, the fact is that neither of the parties stated about the suspension of the programme.

Picture 1
Existing and planned big pipelines in Turkey

 

1_map (original)

 

1. “Kirkuk-Ceyhan” oil pipeline, functions since 1977, maximal flow capacity 1.6 million barrels daily.

2. “Baku-Tbilisi-Ceyhan” pipeline, functions since 2006, maximal flow capacity 1 million barrels daily.

3. “Samsun-Ceyhan” pipeline, planned to start functioning in 2010, maximal flow capacity 1.5 million barrels daily.

4. “Ceyhan-Haifa” pipeline, on the stage of negotiations.

5. At current moment about 3 millions barrels daily flow through Bosporus and Dardanelles strait.

Serious investments are made in Turkey in the expanding of oil refining capacities. According to the available programmes over the next few years Turkey will double its capabilities in that sphere, mainly expanding the capacities of the oil refineries in its Mediterranean seaports (first of all in Ceyhan) up to 2 million barrels daily11.

According to the western sources if the aforementioned programmes are implemented then Ceyhan will become one of the central points of the oil market in the world and in accordance with some calculations it will provide the transition of 5.5% of oil in the world12. According to other data if all those programmes are implemented then in 2012 6-7% of oil will flow through the territory of Turkey13.

Natural gas

The achievements of Turkey in the sphere of natural gas transition are even more impressive.

Since 2001 “Tabriz-Ankara” gas pipeline, which on average supplies Turkey with 7.5 billion cubic meters of natural gas annually, has been functioning. But in the recent period against the background of the rapprochement of Turkey and Iran the active negotiations are under way to supply Iranian gas through the territory of Turkey to Europe and to build on this purpose new Iranian-Turkish gas pipeline. On November 17, 2008 after the memorandum of understanding had been signed with the minister of oil of Iran Gholamhossein Nozari, the minister of energetic of Turkey Hilmi Gulner stated, that Ankara would invest about 12 billion in the production of gas on the 22nd, 23rd and 24th sections of the biggest “South Pars” gas field14 and the construction of gas pipeline from Asaluyeh seaport, which is situated on the Gulf coast, to Turkish Bazargan. The length of the pipeline will be about 1.850km15.

Since the December 15, 2006 “Baku-Tbilisi-Erzurum” or South Caucasus Pipeline, which annual transporting capacity is about 8 billion cubic meters, has been functioning. It is supposed that this pipeline will supply natural gas from Azerbaijan16 and, it is not excluded, also from Kazakhstan and Turkmenistan17 to Turkish and then to European markets.

Ankara lays serious hopes especially on Turkmenistan. While British «Gaffney, Cline & Associates Ltd» company was auditing the general gas resources of Turkmenistan, on May 19-20, 2008 the negotiations between the presidents of Azerbaijan and Turkmenistan on the possibility of Turkmen gas transition to Turkey through the territory of Azerbaijan took place in Baku. In September, after the Georgian-Russian war, the minister of energetic of Turkey Hilmi Guler and in October prime-minister Recep Tayyip Erdogan visited Ashgabat. On October 14, 2008 «Gaffney, Cline & Associates Ltd» published the results of the audit: the general amount of gas reserves in Turkmenistan was valued at more than 27.67 trillion. And on November 29 the tripartite negotiations between Gurbanguly Berdimuhamedov, Ilham Aliev and Abdullah Gul took place; again on the energetic issues.

“Tabriz-Ankara” and “Baku-Tbilisi-Erzurum” gas pipelines connect up in Erzurum and they will be the main suppliers of “Nabucco” pipeline, which is going to be built in the near future18. “Nabucco” will connect Erzurum through the territories of Bulgaria, Romania and Hungary with the biggest Austrian “Baumgarten” gas centre. After the first stage of the construction of the gas pipeline in 2014 it can supply about 8 billion cubic meters, and from 2019, when the alleged construction of the second stage is finished19, the discharge capacity of “Nabucco” will be 31 billion cubic meters annually.

The second biggest gas pipeline, which connects Turkey and Europe, is Turkey-Greece Interconnector, which was opened on November 18, 2007. Its annual discharge capacity is 11.5 billion cubic meters. It is planned that the Turkish-Greek gas pipeline will go further in the direction of Italy as Turkey-Greece-Italy Interconnector, which construction must be over in 2012.

On November 17, 2005 the Blue Stream gas pipeline, which connects Russia and Turkey on the bottom of the Black Sea, was opened. It is planned that in 2010 the gas pipeline will reach its full flow capacity, i.e. 16 billion cubic meters annually, and it is not excluded that it may have its continuation in Turkey-Bulgaria-Serbia-Croatia-Hungary and Turkey-Lebanon/Turkey-Israel directions.

There are also two projects, which have to get Egyptian and Iraqi gas to Turkey.

The first is «Arab Gas Pipeline», which has to transmit Egyptian gas through Jordan and Syria to Turkey. The pipeline up to Syria is built and on January 4, 2008 Ankara and Damascus made terms to extend gas pipeline to Turkey. Its construction should be over in 2011. According to preliminary data Turkey will get through that pipeline annually up to 5 billion cubic meters of natural gas and on the territory of Turkey «Arab Gas Pipeline» will connect to «Nabucco».

The second project purpose is to transmit Iraqi gas to Europe again through the territory of Turkey. On August 7, 2007 in Ankara Turkey and Iraq signed the memorandum of understanding in order to begin talks on the issue, but till now there is no information about any definite result. It is possible that the situation may change after putting into operation new gas pools for which on January 7 an international tender was posted.

And finally Turkey plans to build at least three terminals for getting liquefied natural gas (LNG) in its seaports (Izmir, Ceyhan), which will be able to get natural gas from all over the world. It is known, for example, that the terminal, which is going to be built near Izmir, will have to receive more than 7.5 billion cubic meters of gas annually20.

Picture 2
Existing and planned big pipelines in Turkey

 

2_map (original)

 

1. “Tabriz-Ankara” pipeline, functions since 2001, maximal flow capacity 7.5 billion cubic meters annually

2. “Blue Stream” pipeline, functions since 2005, maximal flow capacity 16 billion cubic meters annually

3. “Baku-Tbilisi-Erzurum” pipeline, functions since 2006, maximal flow capacity 16 billion cubic meters annually

4. “Turkey-Greece Interconnector”, functions since 2006, maximal flow capacity 11.5 billion cubic meters annually

5. «Arab Gas Pipeline», planned to start working in 2011.

6. «Nabucco» pipeline, planned to start working before 2020, maximal flow capacity 31 billion cubic meters annually

7. “Turkey-Israel” pipeline; in the stage of negotiations.

8. “Iraq-Turkey” pipeline; in the stage of negotiations.

9. “Asaluyeh (Iran) – Bazargan (Turkey) pipeline; in the stage of negotiations.

Nuclear energy

Over its history the Republic of Turkey has tried to initiate the development of nuclear energy, but it always faces various odds: from financial problems to military coups. On November 8, 2007 Turkish parliament passed a bill, which supposes that till 2012 reactors with total capacity 5 thousand megawatt will start working21. On November 20 of the same year president Abdullah Gul ratified the bill. On March 24 of the last year the international tender on the construction of the planned nuclear power plant in the proximity of Mersin city, which is situated by the Mediterranean Sea, was posted. In a half of the year, on September 24, 2008 it became clear that only consortium, which included Russian “Atomstroyexport” («Атомстройэкспорт»), “Inter RAO EES” («Интер РАО ЕЭС»), and Turkish «Park Teknik» companies, made a bid. On December in 2008 the nuclear energy agency of Turkey (TAEK) stated that the bid, made by the consortium, meets the requirements. Though later, on January 19, 2009, when it occurred that the price of one kilowatt of electric energy is much higher than the present electric energy price at Turkish market22, and in this context, it was not excluded that the international tender will again be posted, on January 22 the minister of energetic of Turkey Hilmi Guler stated that the works continued and the results of the tender would not be annulated.

According to the information we have, the consortium will build four Russian «ВВЭР-1200» reactors near Akkuyu settlement, not far from Mersin. These four reactors together will be able to generate 4.800 megawatt of electric power. The construction of nuclear power plant will cost Turkey about $7.5 billion. It is planned that it will have been ready by 201223. In the period of 15 years Turkey will buy from the consortium about 415.5 billion KW/h electric power and pay for it $86.3 billion. In accordance with Ankara’s calculations before 2020 the nuclear power plant will produce about 8% of electric power in Turkey and in 2030 this will rise up to 20%24. Except Akkoyu NPP Turkish government intends to build two other nuclear power plants. At current moment the location of only one of those stations is known. It will locate near the Sinop at Black Sea.

Conclusions and prospects:the connection with the national security of Armenia

The strategy of Turkey to become international energetic centre pursues two aims.

The first aim is to ensure the proper presence of Ankara in global decision-making in the ongoing process of the transformation of international political and economic system. In the past it was done mainly by being the NATO member and the most important ally of the US in the Middle East and Muslim world. But in new conditions when the weakening of NATO and the deterioration of the relations between Turkey and the US can cause reduction of the weight of Turkey, Ankara believes that the capabilities introduced to the energetic centre-country are to compensate those losses.

On the other hand, the energetic strategy of Turkey must be considered in the context of the changes taking place in regional policy of the country. If since the establishment of the Turkish Republic Ankara has been the strong point of the western world in the Middle East, then today Turkey tries to take on a key role of the Ottoman Empire in the Middle East and Ankara’s transformation into the energetic centre is to enhance the influence of Turkey in the region and direct them towards Ankara. For example, from this point of view, the decision of Ankara to initiate the process of the normalization of the relations with Yerevan is more notable than the unprecedented sharp approach of the Erdogan government to the actions of Israel in Gaza.

From the point of view of the prospects, the security system Turkey is going offer to the changing region (the Middle East, South Caucasus, and the Balkans) is important. It is obvious that the transformation of the energetic picture of the region (the transformation of Turkey into the energetic centre is just it) cannot but cause the changes in the regional security system. Perhaps “The Caucasian platform of stability and collaboration” initiated by Ankara is the part of the supposed offer of Turkey but it is almost out of question that the main initiatives of Ankara are still to come. A lot will depend on the developments in Iraq, in the line of Syrian-Israeli relations, in the relations with Russia, Iran and Armenia and the developments in South Caucasus in general.

In case of Armenia, the essential factor is that the “transformation” of Turkey and the formation of new situation in the Middle East can “open” that region for us and increase the involvement of Yerevan in this direction. From the practical point of view this means that in the near future the developments in the Middle East may have even more serious impact on the national security system of our country.

1Republic of Turkey, Ministry of Foreign Affairs, “Turkey’s Energy Strategy”, 2008.

2Libya may also be regarded as one of those alternatives but, taking into consideration the fact that this country is only to “open” for the western companies, Libyan direction is more regarded as a perspective one. As for the Liquefied Natural Gas – LNG, which would allow to import gas from every part of the world, the expensiveness of this option (today liquefied natural gas terminals are built only in Western Europe) make it unacceptable for the Eastern part of the European Union, which is the most dependant on Russian gas.

3Today “Gazprom” provides about 40% , i.e. 140 billions cubic meters, of natural gas import in the European Union.

4According to the “BP Statistical Review of World Energy, June 2008” eight countries of the Persian Gulf (Iran, Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar, United Arabian Emirates, Oman) and four Caspian countries (Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan) together possess 45,05% of proven natural gas reserves of the planet.

5It is known that the annual consumption of natural gas in the European Union for 2007 was about 500 billion cubic meters, of which 300 billion cubic meters were imported, then the annual consumption of natural gas in the EU will have been risen to 800 billion cubic meters by 2020. And this is under the conditions when since 1970 the production of gas in Europe has been reducing. If 29 years ago Europe produced 90% of gas it consumed then in 2007 it produced only 40% (source: Pierre Noel, «Beyond Dependence: How to Deal With Russian Gas», November, 2008, European Council on Foreign Relations)

6Source: «BP Statistical Review of World Energy, June 2008».

7Here the steps made by Ashgabat recently should be mentioned. First of all it is referred to the results of the audit of Turkmen natural gas fields, published on October 14, 2008. The audit was carried out by British “Gaffney, Cline & Associates Ltd” company. In accordance with that report the general amount of gas resources in Turkmenistan was valued at more than 27.67 trillion cubic meters, which make this country second after Russia (44.60 trillion cubic meters), from the point of view of the available natural gas reserves. From political point of view the decision of Ashgabat to publish all the report should be regarded as claim to play a new role on the international energy market.

8According to the prognosis of local Turkish authorities in the coming years the growth Turkey will have in energy sector will vary in the range of 6-8% (source: of Turkey, Ministry of Foreign Affairs, “Turkey’s Energy Strategy”, 2008).

9Source: Republic of Turkey, Ministry of Foreign Affairs, “Turkey’s Energy Strategy”, 2008.

10Alongside with the oil pipeline the gas pipeline, water pipe, high-voltage power line and fiber-optic cable are to be built.

11According to the latest data (for 2007), the amount is 714 thousand barrels (source: US Energy Information Administration).

12Source: Turkey: Gul OKs Nuclear Plant Legislation, Stratfor, November 20, 2007.

13Source: Republic of Turkey, Ministry of Foreign Affairs, “Turkey’s Energy Strategy”, 2008.

14It is planned that Turkey will produce about 17 billion cubic meters of natural gas from that sections, and the half of that produced gas it can use for domestic consumption.

15Iran offers to build separate gas pipeline to Europe through the territory of Turkey («Persian Pipeline»), which, having the length more than 3.200km and costing about $6 billion, will transmit gas directly to European market.

16Mainly Azerbaijani “Shah Deniz” gas-well, which is situated in the Caspian Sea and produces about 8 billion cubic meters, is supposed to supply natural gas for “Baku-Tbilisi-Erzurum” gas pipeline.

17With this purpose, in accordance with the plan, the annual flow capacity of the gas pipeline will have to rise up to 20 billion cubic meters.

18On the summit, which took place on January 26-27, 2009 in Budapest and was devoted to the construction of “Nabucco”, the decision was taken that the beginning of the construction of the pipeline is postponed and it will start in next two years. The cost has also risen. Instead of previous $9-10 billion it was estimated $11.8-13.1 billion.

19It is planned to put the additional flowing plants on second stage to increase the flow capacity of the pipeline.

20There is only one terminal near Istanbul for liquefied gas production in Turkey today, which, for example, in 2004, imported from Algeria about 4 billion cubic meters of natural gas, and from Nigeria – about 1.3 billion cubic meters.

21 Let us mention that the specialist in that field from the West doubt that Turkey will be able to implement that programme by 2012, especially in the conditions of present financial-economic crisis. But they add that Ankara can reach its goal for a longer period.

22Today the price for 1 KW of electric power in Turkey varies in the range of $0.04-0.14. Meanwhile the consortium offered $0.21. Later consortium agreed to reconsider and reduce the price.

23On December 13 after the negotiations between Russian president D.Medvedev and Abdullah Gul Russian media reported that in 2009 the consortium would get permission to build Akkuyu NPP and the construction would start in 6 years.

24Source: Saban Kardas, «Is the Russian-Led Consortium Trying to Overcharge Turkey for Its First Nuclear Power Plant?», January 26, 2009, Eurasia Daily Monitor.


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