Turkey is an energy-transit nation that links Caspian and Central Asian suppliers with European consumers. But threatened interruptions to oil and gas transmission lines running through Turkey's Anatolian heartland have raised new questions about the country's place in the global energy market. In August 2008, Kurdish militants in Turkey bombed the Baku-Tbilisi-Ceyhan (BTC) pipeline, forcing the world's second-longest conduit of crude to briefly halt shipments. Fighting between Russia and Georgia days later cast further doubt on the security of the pipeline; Turkey stands to lose millions of dollars in transit fees if crude flows stop. But Turkey's energy issues are not limited to pipeline politics. Inadequate domestic energy supplies, spiking electricity costs in 2008, and an overreliance on Russian gas raise questions about Ankara's own energy future and viability as a critical crossroads for fuel, experts say.
Topping Turkey's energy challenges are strategic concerns in the wake of Russia's brief war with Georgia. Ahmet Davutoglu, the chief foreign policy advisor to Turkey's prime minister, says Turkey's security interests lie in successfully balancing its role as an energy transit country between producers and consumers. "Thanks to the geographical position Turkey enjoys, part of its national strategy involves facilitating the transit of energy across its territory," Davutoglu wrote in a 2007 policy paper (PDF). But this strategy is being challenged by what some analysts says are Russian designs to put "a choke hold" (BosGlobe) on Caspian energy. Eric Kreil, an oil analyst with the U.S. Energy Information Administration, told McClatchy newspapers that as fighting between Moscow and Tbilisi intensified in August 2008, "virtually all production" was shut down for weeks. While the BTC pipeline was not touched, Russia's actions temporarily halted flows through Georgia.
Steven A. Cook, CFR senior fellow for Middle Eastern studies, says that episode left Ankara deeply concerned that its energy strategy may be at risk. Cook says Ankara's desire to form a Caucasus stability pact with Russia--in part to secure Caspian exports--is further evidence of Turkey's growing concern. "They are trying to prevent what they see as Russia's attempt to control oil from east to west" in Central Asia, he says, and if Russia were to succeed, it could "jeopardize Turkey's strategy to become an energy hub." It might also cost Turkey financially: An estimated $300,000 a day in fees is generated from the transit of regional oil and gas supplies, money that helps Turkey pay its Russian energy bills (Jamestown).
The New Silk Road
A web of pipelines already crosses Turkey, carrying hydrocarbons along east-west and north-south energy corridors. Among the most significant of these is the BTC oil pipeline, which connects the Caspian and Mediterranean via Azerbaijan, Georgia, and Turkey--notably, without crossing Russian soil. One million barrels of Caspian crude is pumped each day through the $4 billion pipeline, built through a Western consortium. Roughly two-thirds of BTC oil is headed for Europe. But attacks on this line--including an August 2008 strike by Kurdish separatists in Turkey's southeast--have become a growing concern for Ankara.
Another important pipeline is the Turkey-Greece Interconnector (TGI), which has the capacity to transport 11.5 billion cubic meters of natural gas from Azerbaijan’s Shah Deniz field. A planned extension will link Italy to the line by 2012. Like the BTC oil pipeline, the line bypasses Russia.
Other pipelines already pumping or in the works in Turkey include:
- Kirkuk-Ceyhan: This 600-mile pipeline links northern Iraq with the Turkish port of Ceyhan. Two parallel lines have a combined capacity of roughly 1.6 million barrels a day, but a string of terrorist attacks since 2003 have repeatedly shut the pipeline down.
- Blue Stream: The 754-mile Blue Stream pipeline connects mainland Russia with mainland Turkey, and will eventually deliver 16 billion cubic meters of gas annually once operating at full capacity. (The line was officially inaugurated in November 2005). A joint venture between Turkish, Russian, and Italian energy firms, Blue Stream was meant to provide Turkey with cheap gas by bypassing land routes in Eastern Europe. But the project has been criticized by the United States for potentially making Europe more dependent on Russia for energy.
- Samsun-Ceyhan: A proposed bypass to the heavily traveled Bosporus shipping lane, this 350-mile long line would transport oil from the Kashagan oil field in Kazakhstan's portion of the Caspian Sea. Turkish officials say the project is part of a broader effort to reduce Bosporus traffic and protect Istanbul from a potentially devastating oil spill. The pipeline is expected to begin exporting oil by 2011 (Reuters).
- Nabucco: This multinational pipeline, projected to open in 2015, would transport gas mainly from Azerbaijan (with future contributions from Turkmenistan, Kazakhstan, and other sources) to Central Europe through the Turkish gas hub of Erzurum. Conceived in February 2002, the project would enable EU countries to diversify supply while bypassing Russian territory. Questions about the economic and political viability of the project surfaced in late 2007 (Eurasianet), although Turkish officials--including Foreign Minister Ali Babacan--were more optimistic following the Russia-Georgia conflict. "We want to do it," Babacan said at a CFR meeting in September 2008. Yet to date the project remains stalled over disputes between Turkey and the European Union on pricing and Turkey's role as a potential gas trading hub.
Energy Bridge, or Barrier?
How and whether Turkey will leverage its position as an energy transit hub remains to be seen. During the 1990s, Turkey and the United States cooperated to develop an East-West energy corridor that would transport oil and gas exclusively to Western markets without passing through Russian- and Iranian-controlled territory. The aim was to meet Turkey's booming need for energy, develop Central Asian export options, and counter a possible Russian monopoly on transport of the continent's resources. But since the early 2000s, competition for control of the region's fossil fuel wealth has increased between the region's producers, transporters, and consumers.
Russia's brief war with Georgia in August 2008 reminded Turkey that the BTC pipeline "is not invincible," according to the intelligence website Stratfor. Nick Butler, chairman of Britain's Cambridge Center for Energy Studies, tells CFR.org that future pipeline projects in the region could come under greater Russian influence if Moscow chooses to assert itself, a prediction the Kremlin has fueled by talking up a potential international gas cartel with Iran and Qatar, and pushing the Gazprom-backed South Stream pipeline as an alternative to Nabucco. Both moves by Russia could force the United States and Europe to turn to Iran for future energy needs, a move to which Washington is averse as it moves to tighten sanctions on Iran for refusing to suspend its uranium-enrichment program, suspected as cover for developing nuclear arms. Tehran, for its part, is promoting itself as a possible alternative transport corridor for the export of gas from Azerbaijan and Kazakhstan.
Turkey, meanwhile, is keeping its options open. Bulent Aliriza, Turkey project director at the Center for Strategic and International Studies, says posturing by Moscow has pushed Ankara to balance its cooperation with the West while expanding cooperation with Russia and Iran. "For Turkey to be an energy hub, the energy resources don't have to go from east to west--they can also go from north to south." During his talk at CFR in September 2008, Babacan said this strategy is already bearing fruit. Pipeline projects connecting Turkey with Egypt, Iraq, Greece, and the Black Sea "show how important Turkey is going to be for years to come," Babacan said.
Katinka Barysch, deputy director of the Center for European Reform, a London think tank, says it's too early to know how European markets will be affected if Turkey's diversification strategy continues, or if Russia eats into Ankara's transport plans. Turkey's emergence as a European energy hub seemed assured only a few years ago, but today, Katinka argues, Turkey seems to be stuck in the middle of a great European energy game (PDF): with Europe looking to Turkey for diversification; Russia seeking to maintain its grip on the continent's gas transports; and Central Asian suppliers like Turkmenistan eager to expand to new markets but fearful of alienating Russia.
Turkey's Energy Portfolio
Amid its plans to develop international pipelines, Turkey is coming to grips with pressing domestic energy needs. Over the next decade Turkey's annual energy consumption is forecast to more than double, to the equivalent of 222 million tons of oil, according to the Turkish National Committee of the World Energy Council, an international energy consortium. At present, the bulk of Turkey's demand is met by natural gas, coal, and hydropower. Natural gas and coal combustion generate roughly half of the country's 40,000 megawatts of electricity; oil is another major energy source. Hydropower accounts for nearly one-third of the country's power generation. Turkish government estimates suggest additional capacity could push hydroelectricity's contribution to 46 percent by 2020 (PDF) through the construction of additional plants in Turkey's east and southeast.
Analysts say Turkey's heavy reliance on imported fossil fuels--specifically natural gas--poses the biggest long-term challenge for leaders in Ankara. Turkey possesses nearly no recoverable oil or gas reserves of its own, according to the U.S. Energy Information Administration. That means Turkey is dependent on foreign suppliers to meet a growing demand for energy resources. The Turkish National Committee says Turkey spent $35 billion in oil and gas imports in 2007, an 80 percent increase from 2005.
Nearly 70 percent of Turkey's domestic oil and gas are bought from abroad, and Russia and Iran are its top suppliers. In 2007 Moscow supplied 23.2 billion cubic meters of gas to Turkey, 64 percent of the country's imports of gas. With Russia, regional analysts say Turkey must contend with a resurgent regional power intent on monopolizing the transport of the continent's gas. Turkey and Russia's state-owned Gazprom are slated to renegotiate a key gas contract in 2011, and some speculate Turkey could be in for a price spike. Moscow has been accused in the past of jacking prices for political reasons. Such a move could have a devastating impact on Turkey's already slowing economy.
Iran, which supplies Turkey with 17 percent of its gas imports, presents another set of political challenges. The first is opposition from the West; Washington has criticized Ankara's cooperation with Tehran on gas and power-generation projects. But Turkey must also contend with Iranian shortages and production shutdowns, including frequent interruptions during the winter months (Today's Zaman). While Iran sits on massive gas fields that could offset Turkey's Russian imports, analysts say Tehran does not have the capacity to develop them in a time frame that would meet Turkey's needs. "You're looking at at least seven to ten years before you're going to get any gas out," said one Western diplomat familiar with Turkey's energy strategy, who spoke anonymously under normal diplomatic rules. "Turkey's need starts in 2011. So Iran is not the solution for them." Other potential suppliers include Azerbaijan, Algeria, Iraq, Nigeria, and Turkmenistan, though none of these countries are considered willing or currently capable of meeting demand in the near future. "Which brings us back to the Turks saying, 'We need gas,'" the Western diplomat said. "Where's it going to come from?"
Greg Bruno traveled to Turkey on an IRP Gatekeeper Editors trip organized by the International Reporting Project (IRP) at The Johns Hopkins University's School of Advanced International Studies (SAIS) in Washington, D.C. This article drew on reporting conducted during that trip.