The high economic growth of Turkey which has been going on for more than a decade now intensified Turkey’s need for more energy. It is estimated that Turkey is going to need a substantial volume of energy which will amount to a 7 % annual growth for the Turkish energy market until the year 2023. The total amount of investment that is going to be needed in order to cover Turkey’s needs for energy by 2023 is USD$ 120 billion. In order to secure the necessary amount of energy to cover the needs that high economic growth dictates, Turkey needs to diversify its energy suppliers and secure the stable flow of oil and gas that its industry needs. In order to do so Turkey has taken the decision to transform itself in to an energy hub.
The advantage that Turkey’s geographical location poses for the country is a well known fact. Turkey is strategically located in between Asia and Europe and perfectly serves as a transit route for energy due to its proximity both to the energy suppliers and to the consumers. Upon their completion Turkey is expected to house 13 different natural gas and oil pipelines passing through its territory in the short to midterm. Once and if completed the proposed projects of Arab Gas pipeline, Nabucco pipeline, Qatar-Turkey pipeline and Trans-Anatolian pipeline (TANAP) will turn Turkey into major energy corridor.
The Issue of Diversification and the New Opportunity in the Eastern Mediterranean
The discovery of new oil and gas fields in the Eastern Mediterranean provides a newfound opportunity for Turkey to diversify its energy suppliers. Especially the discovery of the Leviathan gas field which is considered as one of the largest off shore gas findings of the decade is an important opportunity for all the countries in the region including Turkey. The numbers will reveal why the discovery of this well might be a game changer in the energy politics of the region. The Leviathan well is considered to house 25 million cubic feet of natural gas and more than 600 million barrels of oil.
When these numbers are combined with the additional gas reserve which is estimated to be around 220 billion cubic meters in the Tamar gas field, it is self revealing that the region will soon serve as one of the most important suppliers of energy in to the world markets. Turkey, by its very geographical location, is one of the most important candidates to serve as a transport route for the conveyance of the gas and oil extracted from the Easter Mediterranean to Europe. Moreover the existence of gas pipelines for years inside the Turkish territory has already provided Turkey with the labor force which has the necessary technical expertise to maintain and repair the pipelines and the related facilities. Apart from the geographical position of being located in close vicinity of hydro-carbon consumers and producers and having obtained the necessary expertise for maintenance, size of the Turkish market itself makes Turkey an indispensible partner to parties involved in the Eastern Mediterranean gas fields.
On the one hand Turkey exploits its location, market clout and expertise to serve as an energy hub and on the other hand it takes the necessary measures to ensure the energy price stability that such a role requires. In this regard the boldest step that has being taken by Turkey is the establishment of EPİAŞ which is going to serve as an energy exchange to stabilize the prices. The Electricity Market Law points the second quarter of 2014 for the establishment of the exchange and institutions will be jointly owned by the Istanbul Stock Exchange (Borsa İstanbul), private sector players and the Turkish Electricity Transmission Company (TEİAŞ)to ensure investors’ confidence. Once it is established Turkey will an energy market with more foreseeable and stable prices that can fuse its geographical advantage, technical expertise and market scale with investor confidence.
Herdem Law Firm, Istanbul Turkey