Turkey’s ambition to become energy hub remains in place

Today the situation is no different, although the goods and their delivery, especially for goods crucial to the energy needs of nearby nations, have change significantly. 2009 was no exception in the importance of Turkey as a trade corridor -- or in this case, an energy corridor.

2009 saw the signing of an intergovernmental agreement in Ankara between Turkey, Romania, Bulgaria, Hungary and Austria that would allow natural gas to be piped through the planned Nabucco pipeline. The signing was seen as a milestone in the development of a pipeline that would provide an alternative for Russia-dependent Europe. The agreement was viewed as a sign of hope that the much-anticipated pipeline would be finished on time in 2014. “Now that we have an agreement, I believe that this pipeline is inevitable rather than just probable,” said European Commission President Jose Manuel Barroso at the signing ceremony. Ata Ceylan, speaking to Today’s Zaman yesterday, stressed that the start of the Nabucco project in 2009 was a significant step toward the transformation of Turkey into a strategic energy distribution point.

Another stream, another option

Along with the Nabucco agreement, the South Stream project, a pipeline that would bring Russian natural gas across the Black Sea to Bulgaria and beyond, bypassing Ukraine completely, was also a point of much contention as Turkey hosted Russian Premier Vladimir Putin to sign a deal on running feasibility studies on Turkish soil for the South Stream pipeline. Turkey’s loyalty to the Nabucco project was questioned as it took this step towards Russia in helping it build Nabucco’s rival. Energy Minister Taner Yıldız dismissed claims that Nabucco and South Stream were rival projects, saying they complement each other in meeting Europe’s ever-growing energy needs. “Turkey has made the best move in the energy chess game, where balances change constantly,” he said in a letter to deputies in August to brief them on Turkey’s regional energy cooperation initiatives. “The intensive energy diplomacy will move ahead uninterruptedly, and our efforts to secure the energy supply for our country will continue.”

Sohbet Karbuz, the head of the Oil and Natural Gas Department at the Union of Mediterranean Energy Companies (OME), differed on the Nabucco project, saying that although the project had formally been launched, no concrete steps had been taken in the five months after signing it. “There haven’t been any concrete steps taken toward the Nabucco pipeline. Unlike Nabucco, it’s rival, South Stream, has seen the frequent signing of agreements to get the project moving.”

The price of natural gas was an especially important topic brought to the fore in 2009, as the state-owned Turkish Pipeline Corporation (BOTAŞ) was hammered with an unexpected $704 million bill from Iran for natural gas not bought, a fee that is levied under the purchase-or-pay contracts signed. Price hikes reaching 75 percent in 2008 severely reduced consumer demand for natural gas and were partially rolled back through discounts in 2009. Though Minister of Energy Yıldız later noted that this $704 million would go to towards future procurements of natural gas, the fee raised concerns about the volatility that these developments created for BOTAŞ. However, BOTAŞ still managed to post TL 3 billion in profits for the first 10 months of 2009, breaking its profit expectations twofold.

The prime ministers of Austria, Hungary, Turkey, Bulgaria and Romania along with the EU president signed the Nabucco natural gas pipeline agreement in Ankara, taking the first step in the realization of the project.

A new face for the ministry

Minister of Energy and Natural Resources Yıldız was selected to be the new minister of energy, taking over the post from Hilmi Güler in May. “This is the most important development in the energy sector this year,” said Ceylan. “He is someone who hails from within the sector and knows the ins and outs of energy. He is someone the market trusts and has brought a new set of dynamics to the sector,” added Ceylan. As soon as Yıldız was selected he visited the Energy Market Regulatory Agency (EPDK) to resolve disputes between the two agencies, agencies whose cooperation is crucial to the functioning of the energy sector.

Karbuz differed in his views of the accomplishments of the Energy Ministry in 2009, criticizing the ministry’s seemingly haphazard energy policies. “Turkey has not developed an external energy strategy. … If there is no plan, we are not going to get anywhere, and there haven’t been any concrete steps taken in 2009 where we can see the results in the near future. External investments are being held back because there is no strategy set. … Turkey has great energy potential, but we haven’t taken advantage of it in 2009,” he said.

2009 was also an unfortunate year for proponents of nuclear power plants being the panacea of Turkey’s electricity woes as the international call for tenders for the construction of Turkey’s first nuclear energy power plant in Mersin’s Akkuyu district was cancelled in November, amid claims that the conditions of the tender did not fit Turkey’s needs. A joint venture composed of Russia’s AtomStroyExport, Inter Rao UES JSC and the Ciner Group’s Park Teknik was the sole bidder in the tender for the construction and operation of the nuclear plant. Their bid was cancelled, a move that crushed parties looking to see a conclusion to the decades-old goal of building Turkey’s first power plant.

Another setback that dampened the hopes of renewable energy firms looking to start investing in Turkey’s promising renewable energy opportunities was the failure of the renewable energy bill to be passed by Parliament and its removal from Parliament’s agenda, which would have put forward standards for government support for energy derived from renewable sources. Ceylan stressed this issue as one of the more important developments in 2009, adding that at the least Yıldız promised to oversee the evaluation of 2,500 megawatts (MW) worth of wind farms out of the more than 70,000 MW of applications for licenses. Karbuz noted that “they can approve as many licenses as they want, but if the law isn’t in place, if investors don’t know the details of what kind of support they will get, what kind of guarantees they will have, then these investments will not materialize.”

How Turkey’s energy developments will fare in the near future is uncertain, but given its performance in 2009, there is no doubt that 2010 will bring groundbreaking developments, or at least agreements to some day break ground. A resolution of the renewable energy bill, a conclusion to the nuclear tender, concrete steps taken towards finishing Nabucco and a determination of the role of South Stream are all being watched, as Turkey tries to make the most of its crucial location.