By Gulshan Dietl, IDSA November 7, 2013 
Largely unaffected by the stagnation in most of the
developed world, the Turkish economy has continued to grow and stands at $800
million today. Consequently, its demand for energy has increased and is
expected to double over the next decade, according to the International Energy
Agency.
Natural gas accounts for an increasing share of the energy basket in
Turkey. Its gas-generated electricity demand growth is estimated to be even
higher.

Turkey’s natural gas reserves are 218 billion cubic
feet (bcf) and its production is roughly 27 bcf. In the circumstances, it
relies heavily on imports to meet its domestic demand. Additionally, Turkey
positions itself as a gas transit hub – importing from Russia, Azerbaijan,
Turkmenistan and Iran and re-exporting some of it to Europe. More importantly,
it provides passage from the gas production sites to the consumers. Today, it
holds a privileged location between the substantial gas reserves of the Caspian
basin and Russia and the substantial market in Europe.
In 2011, the country imported approximately 890 bcf
from Russia via the underwater Black Sea Blue Stream pipeline, about 290 bcf
from Iran via the Tabriz-Dogubayazit pipeline, and approximately 140 bcf from
Azerbaijan via the Baku-Tbilisi-Erzerum pipeline. The latter one is expected to
be integrated into the Southern Gas Corridor pipelines – a European Union initiative
to secure gas from the Caspian.
A critical scrutiny of the prospects for Turkey’s
emergence as the natural gas hub is in order. The domestic demand is growing
leaving little surplus to meet re-export commitment – especially during the
peak months. The gas infrastructure has been vulnerable to frequent terrorist
attacks leading to supply disruptions. The Baku-Tbilisi-Erzerum pipeline or any
other pipeline entering from Georgia has to pass through Turkey’s Kurdish
region, where the attacks from the militant rebels have increased in frequency
and damage. The pipeline from Iran has also witnessed sabotages.
Regionally, the Interconnector Turkey-Greece-Italy
(ITGI) transportation project from the Shah Deniz gas field in Azerbaijan to
Italy has had positive fallout in Turkey’s relations with Greece. The initial
agreement between the Turkish state pipeline company BOTAS and the Greek gas
company DEPA led to the laying of the pipeline by the Turkish Prime Minister
Recep Tayyip Erdogan and the Greek Prime Minister Kostas Karamanlis in 2005 – a
milestone in decades of distrust and hostility between the two nations. The
pipeline is operational since 2007.
On the other hand, Turkey is entering into troubled
waters in its quest for more pipeline options in the region. The BOTAS has
already started building a large pipeline toward northern Iraq planning to
import gas from the Iraqi Kurdistan. The project is bound to invoke opposition
from the central Iraqi government in Baghdad. The Turkish Minister of Energy and
Natural Resources Taner Yildaz has also expressed interest in playing a large
role in importing and re-exporting Israel’s gas deposits from the Leviathan gas
field. Implementation of the project will have negative fallouts for the
Turkish regional policies.
The Qatar-Turkey agreement to build a pipeline
originating in Qatar and moving through Saudi Arabia, Jordan and Syria reaching
Turkey has been perceived to be one of the major reasons for the uprising in
Syria. A pliable regime in Syria would have been an absolute prerequisite in
its implementation. The Turkey-Iraq Pipeline and the Arab Pipeline from Egypt
have not been realized due to the political instability in the region. The gas
imports from Iran have remained static in view of the sanctions on the country.
Beyond the region, Turkey suffers at times and
benefits at others from the global scramble for a share in the gas resources.
It has been a contested territory for rival pipeline proposals – the most
interesting being the South Stream project of Russia and the Nabucco project of
the West. The South Stream pipeline proposes to carry gas from the Russian
Black Sea coast in Krasnodar Krai through an off-shore pipeline under the Black
Sea to the Bulgarian landfall near Varna and a connecting on-shore pipeline
from there to Greece, Italy and Austria. In 2009, the pipeline was rerouted
through the Turkish exclusive economic zone to avoid the Ukrainian exclusive
economic zone as Russia and Ukraine fell out on the terms of the agreement. An
ambitious project to deliver 63 bcm of gas annually, it is expected to start
its commercial operation by the end of 2015.
The Nabucco, originally proposed in 2002, was to
follow roughly the same route as the South Stream. A decade later, it was
revised as Nabucco-West which would have been a shorter and a more modest
version. The Nabucco-West would have been a commercially viable and
logistically advantageous proposal but the risks of causing a gas glut in the
market and of raising tensions with Russia doomed its prospects. In June this
year, its fate was finally sealed when the Trans-Adriatic Pipeline (TAP) was
chosen as a route from the Shah Deniz II fields in Azerbaijan to Western
Europe. The TAP will connect with the Trans Anatolian Pipeline (TANAP) near the
Turkey-Greece border in Kipoi, cross Greece, Albania and the Adriatic Sea
before coming ashore in southern Italy.
Rotterdam is the undisputed leader as the hub for
crude oil. It is one of the world’s largest ports with a huge rail, road, air
and sea network. Handing the cargo, managing trans-shipment, operating
refineries and petrochemical plants, the city has acquired the title of
“Gateway to Europe”.
So, will Turkey be the hub for gas tomorrow like
Rotterdam is the hub for oil today? Its ambition to emerge as a major conduit
of gas to Europe suffers from an inherent limitation; the future growth in
energy demand will be from Asia and not Europe.

Views expressed are of the author and do not
necessarily reflect the views of the IDSA or of the Government of India.
Originally published by Institute for Defence Studies
and Analyses (www.idsa.in) at http://www.idsa.in/idsacomments/WillTurkeybethenewhubforgas_gdietl_06111

The Institute for Defence
Studies and Analyses (IDSA) is a non-partisan, autonomous body
dedicated to objective research and policy relevant studies on all aspects of
defence and security. Its mission is to promote national and international
security through the generation and dissemination of knowledge on defence and
security-related issues. IDSA has been consistently ranked over the last few
years as one of the top think tanks in Asia.