TURKEY CONTINUES ITS RISE AS A MAJOR PLAYER IN WORLD ENERGY MARKETS
TURKEY IS BECOMING A MAJOR EXPORTER AND IMPORTER OF OIL AND GAS IN EQUAL MEASURE.
TURKEY’S ROLE IN THE EURASIAN ENERGY MARKETS WILL CONTINUE TO GROW IN THE PERIOD 2020 TO 2040.
1. The recent discoveries of Turkish oil and gas in the Black Sea
Recent discoveries in the Black Sea promise a nice harvest of hydrocarbons. So far, Turkey has only limited oil and gas deposits. Most of the existing prospects lie across the Turkish border in Syrian and Iraqi territory. Although Turkey gets some of its oil and gas from neighboring countries such as Syria and Iraq, it would be of great benefit to the Turkish economy to have domestic oil and gas reserves that can be tapped reliably. The exact amount of these deposits is open to speculation, but they will be a nice addition to Turkey’s existing midstream oil and gas business. Russia’s South Stream runs through Turkish territory and supplies southeastern Europe with natural gas.
The discoveries of oil and gas in the Black Sea also mean that Turkey can be supplied with oil and gas from all sides. From the north, Turkey can be supplied with Russian oil and gas. From the east, Turkey can be supplied with oil and gas from Azerbaijan. From the southeast, Turkey receives oil and gas supplies from Syria and Iraq. From the southwest, Turkey can receive oil and LNG from the Gulf states, which is another option. In any case, should all other options fail, Turkey can fall back on its oil suppliers of last resort. The distance to the Gulf states is relatively short by global standards. Turkey could import the oil from port facilities on the Red Sea. The oil would be channeled through the Suez Canal and brought to Turkey through the eastern Mediterranean. Turkey is in relative proximity to the world’s most important region for hydrocarbon deposits. This gives Turkey several options to meet its energy needs for many years.
Turkey’s energy situation can be further improved if the country gains access to the oil and natural gas reserves of the eastern Mediterranean. Offshore activities are much more costly than conventional oil production, but for an oil importer they can justify the cost. This may be because the cost of delivering this oil to the market is greatly reduced. The oil and gas would be produced close to the Turkish coast and could be brought to the market in a very short time. Cooperation with the other countries bordering the Mediterranean Sea will be of great importance. This is especially true for cooperation between Turkey and Greece and for cooperation in maritime disputes over oil and gas fields and their prospecting rights.
2. A larger sphere of influence for Turkey: the eastern Mediterranean and rich oil and gas deposits.
The search for new oil and gas deposits continued beyond the Sea of Marmara. Significant deposits of oil and gas have also been found in the eastern Mediterranean. At the same time, there are disputes over maritime boundaries that affect which country can exploit these deposits. This is important because many of these oil fields cross national borders and can be tapped by either side.
The actual investment in upstream oil production is significant because it is offshore oil production, and it will take many years to produce enough oil to make it worthwhile to operate. But so far, the projects look very promising and can contribute to the energy security of countries along the eastern Mediterranean.
3. Turkey has decent wind power and solar power potential.
In addition to fossil fuels, Turkey also has excellent opportunities to generate more electricity from renewable energy sources. Turkey’s potential for wind energy is significant, even though it lies within the Eurasian landmass. But it does not stop at wind energy. Turkey has good prospects for solar energy. Solar energy is likely to become much more important for power generation, especially with the emergence of decentralized energy concepts in Anatolia. Solar energy will make a positive contribution to Turkey’s energy security.
At this point, we have not even talked about Turkey’s hydropower potential, which is indeed huge. The fact that Turkey is a mountainous country plays a role in this. At the same time, hydropower may bring Turkey into conflict with its southeastern neighbors, as water is traditionally considered a precious resource. Indeed, water is the lifeblood of communities in hotter climates, and small discrepancies in water availability can make or break crop failures. Therefore, Turkey exerts a tremendous influence on the agricultural prospects of regions further downstream.
Nevertheless, hydropower remains one of the best ways to generate electricity in a renewable and sustainable way. But this is only true as long as hydropower does not compete with agricultural production. Agriculture itself consumes huge amounts of energy. A lack of water can lead to soil erosion. Importing staple crops and fertilizers to compensate for the decline in agricultural production and loss of soil fertility can make hydropower no longer worthwhile. There are other factors that may make hydropower less viable in the long term. In the coming century, water availability in Turkey may decrease due to climate change. This will also affect nations further downstream.
The extent to which Turkey can benefit from renewable energy will depend on actual investments in the coming years. The falling exchange rate should make it more attractive for Turkish energy companies to produce wind and solar plants in Turkey. The exchange rate has dropped significantly in recent months. This could boost Turkish production of renewable energy technologies in the coming years.
Turkey is in a much better position than its European neighbors and can draw on multiple sources to generate electricity and supply commerce and industry with all the fossil fuels they will ever need. The availability of energy resources also means that Turkey can supply its industry with cheap energy, which will be particularly relevant for manufacturing given the falling exchange rate, which will make imports of raw materials and technology less attractive for the time being. Cheap energy will be particularly important for Turkish heavy industry, which will benefit greatly from competition among the various energy sources and exporters vying for a share of the Turkish energy market.
In addition, Turkey is expected to increase its footprint as an energy importer and exporter. Turkey is expected to become increasingly important as a transit country for energy commodities as its influence in the energy markets of the Eastern Mediterranean, Black Sea region, Caucasus, Levant, and Gulf countries continues to grow over the period 2020-2040.