Turkey Unleashes New Energy Strategy Plan

By Saban Kardas

The Turkish energy ministry announced the strategic energy plan for 2010-2014, which seeks to accomplish several objectives: boosting supply security and Turkey’s influence in regional and global energy markets, protecting the environment, making greater use of domestic resources and restructuring the legal-institutional infrastructure of the national energy market (www.enerji.gov.tr, April 15).

The statistics provided in the report reveal clearly the pitfalls of Turkish energy policies. Although Turkey is poor in hydrocarbons, it is heavily dependent on conventional fuels. While Turkey’s current total proven oil reserves could meet only its consumption for a year, its entire natural gas reserves could satisfy only one sixth of its consumption for one year.

Critics of Turkish energy policies, therefore, have argued that, despite this gloomy picture, various Turkish governments have rendered the country dependent on imported fuels. They highlight how Turkey disproportionately invested in power plants generating electricity from natural gas, at the expense of hydroelectric or coal-based power plants. Critics have claimed that Turkish governments have failed to develop the necessary legislative infrastructure to promote investment in alternative and renewable energy sources. Many also maintain objections to nuclear power, because of its environmental risks and dependence on outside technology to build nuclear power plants (see the conclusions of the 7th Energy Symposium, www.tmmob.org,tr, December 17, 2009).

Thus far, the energy policies of the incumbent AKP government have accomplished little to alter this situation, as the dependence on foreign, especially Russian, oil and gas continued under its rule. Notably, two-thirds of Turkish natural gas imports still come from Russia. The government’s awarding of the contract for the construction of the nuclear power plant to a Russian company provoked further criticism, as it bolstered dependence on one supplier, coming to pose a strategic liability (EDM, January 15).

> Turkey Map
The energy plan takes into account such criticism. It sets certain headline goals to reach by 2023, the centennial anniversary of the Turkish Republic. It underscores the importance of diversifying energy resources, transportation routes and technological infrastructure to boost energy supply security. In the notorious case of overdependence on Russian gas, by 2015, the government seeks to reduce the share of one single country in Turkey’s imports to 50 percent.

The plan’s overarching theme could be defined as “go domestic.” Its long-term objective is to tap into all the available domestic reserves, as well as boosting Turkey’s capacity to utilize renewable energy resources. The government also plans to accelerate offshore oil and natural gas exploration projects in the Mediterranean and Black Sea. In recent years, speculation about the existence of enormous oil and gas fields in the Black Sea have abounded, prompting Turkey to develop partnership with Brazil given its expertise in deepwater oil exploration (EDM, May 26, 2009).

Another major objective is to conclude the construction of several hydro electrical or coal-fired plants throughout Turkey. In that context, the plan urges the exploitation of coal reserves as part of a broader objective to boost revenues from mining operations. Indeed, the Turkish press recently featured several reports about the potential offered by coal-based plants. In a sense, such calls echo the ongoing discussions in the United States, where greater utilization of clean coal technologies is seen as the key to energy independence.

In apparent defiance of such criticism, the plan also aims to add nuclear power into Turkey’s inventory. By 2014, the construction of the nuclear plant is expected to be started, so that 5 percent of the total electricity production comes from nuclear power plants by 2023.

The plan also highlights Turkey’s efforts to become a major energy corridor. It indicates that Turkey will pursue aggressive policies to make the best use of its geostrategic position in the context of the existing and planned pipeline projects. The government vows to strive for the successful conclusion of the project support agreements for the Nabucco pipeline, so that the construction could start in 2011, and the pipeline could become operational in 2014. In a related development, Turkey expects to launch work on a pipeline to connect Turkish and Syrian natural gas grids. Also, in the wider geostrategic context, the report reiterated Turkey’s goal of turning the Ceyhan port on the Mediterranean cost into a worldwide hub.

Another issue concerns the liberalization of the Turkish domestic energy market. In order to ensure cheaper and higher quality energy supply, the government will work toward creating a free and competitive energy market. Of particular importance is the ongoing privatization of the electricity distribution networks.

How realistic are these goals? Despite the ambitious objectives, Turkey is likely to remain dependent on hydrocarbon imports, which will continue to affect its relations with its oil and gas rich neighbors. The idea of cutting Russia’s share in natural gas supplies sounds appealing, but the long-term contracts in gas markets might limit Turkey’s ability to achieve such goals. Although the preparations for drilling operations in the Black Sea are underway, it remains to be seen if it might prove to be the next Nordic Sea to ensure Turkey’s self-sufficiency in energy.

Moreover, some of these goals are contradictory. For instance, the heavy emphasis on coal-fired plants or the calls for a new mining rush might conflict with the plan’s goals pertaining to developing environmentally-friendly policies. It is telling to observe how the government’s recent draft legislative proposals on mining came under attack from environmentalist groups (Hurriyet, April 20). Likewise, the liberalization of the Turkish energy market might contradict the objective of boosting its national self-sufficiency, as it may render Turkey’s downstream markets vulnerable to foreign penetration (EDM, September 25, 2009).

> Nabucco Pipeline Map
Furthermore, it is important to recall that in the past Turkey’s excessive efforts to capitalize on its geostrategic position emerged as a source of tension with other players in regional and global energy markets, rather than helping it become a reliable energy corridor. To the extent that Turkey overused its position as a bridge or hub between the producers and consumers, it ran into significant conflicts of interest with the EU and Azerbaijan, which resulted in delays in the Nabucco project. Although Turkey scaled down some of its objections, how it will define its role in energy sectors in the new era will have implications for its role in energy markets.
Eurasia Daily Monitor