Analysis: Turkey's energy future

By BEN LANDO Turkey is a crucial transit country for the world's oil and natural gas market, and a top Foreign Ministry official says its role will increase as the industry brings more sources to market and demand continues to rise.

"Our main purpose is to contribute to the global energy security of supply," Vural Altay, deputy director general for energy, water and environment in Turkey ' s Foreign Ministry, told UPI Tuesday on the sidelines of an energy conference. "In order to achieve that we are working on different projects ... both in oil and gas." Turkey, the world's 14th-largest net oil importer, is looking to meet its own energy needs with an ambitious nuclear power plant plan as well as renewables, Altay said.

And, despite being well-positioned between the world's largest oil and gas producers and consumers, it's also in a hot spot of geopolitical turmoil. Ankara is keeping a close watch on political goings-on in Iraq as the Parliament in Baghdad awaits a new law governing its oil and gas reserves -- which, once developed more, will head to market via Turkey -- and Iraqi Kurds stake claim to more land and autonomy.

More than 3 million barrels of oil head south each day through the Bosporus, according to the U.S. Energy Department's data arm, the Energy Information Administration, an increasing number that causes a bottleneck for the market and potential environmental catastrophe.

"Despite all the safety measures ... the risk of a tanker accident in the Turkish Straits persists," Turkish President Ahmet Necdet Sezer said Tuesday at "East Meets West: New Frontiers of Energy Security," a conference organized in Istanbul by Cambridge Energy Research Associates. Turkish Straits is another name for the Bosporus, 17 miles of water off Istanbul ' s coast connecting the Black and Mediterranean seas, where 5,500 tankers each year take Asian oil to European markets. As oil-rich countries like Kazakhstan, Turkmenistan and others increase their production, Altay said Turkey is leading a charge to build alternative routes for the oil, including more pipelines sending it -- and, increasingly, natural gas -- to a port in Ceyhan, Turkey. Already, twin pipelines with more than 1 million barrels per day capacity send most of Iraq's northern oil exports to Ceyhan, though regular attacks from Sunni insurgents have rendered the link mostly useless. A new pipeline from Baku, Azerbaijan, through Tbilisi, Georgia, to Ceyhan -- notably, for political reasons, bypassing Russia -- "will reach its full capacity in a couple months' time," Altay said. The BTC line began delivering Azeri oil in June 2006, with 193 tankers loaded since. The 1 million bpd capacity is expected to jump by 600,000 bpd when Kazakhstan is connected. A planned pipeline from Samsun, on Turkey's Black Sea coast, to Ceyhan would not only reduce traffic on the straits but also boost Ceyhan's visibility on Turkey's and the world's energy radar.

"This will turn Ceyhan into an energy terminal," Altay said. A proposed pipeline taking Iraqi natural gas along the same route to Ceyhan, among other projects including refineries, petrochemical facilities and a liquefied natural gas terminal, means Ceyhan "will be an important energy center" through which 5.3 percent of the world ' s oil supply will flow. Turkey produced only a fraction of the 618,000 bpd of oil it consumed last year and 967 billion cubic feet of natural gas in 2005, the most recent EIA data available; demand is rising.

"Since our energy demand is growing almost 7 percent a year, we also decided going to the nuclear energy fields and build a couple nuclear power plants with a total capacity of 5 megawatts," Altay said. Parliament, which faces an election later this year, has to give final approval first. Energy Minister Hilmi Guler said Tuesday Turkey has a potential $10 billion wind power market and $20 billion hydro market. Such optimism is blunted by Turkey's neighbor to the southeast, Iraq, with the world's third-largest oil reserves and gas stocks nearly to match, coupled with a decaying security situation and stalled legislation governing the petroleum reserves. Turkey supports a centralized governance system and one where Iraqi Kurds, semi-autonomous since 1992, are far from independent of it, fearing Turkey's own Kurdish population would demand the same.

This pits Ankara against Kurdish claims that Kirkuk, Iraq, a historically Kurdish city with many citizens of varied nationalities and religions -- including Turkomen -- and a sizable chunk of Iraq's oil reserves should be part of the Kurdistan Regional government. A referendum scheduled to take place by the end of the year will decide the city's future.

(e-mail: energy@upi.com)

ISTANBUL, Turkey, June 26

More Energy (Environment) News click here