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Turkey's role on natural gas pipelines is limited

Dr. Dicle Korkmaz has been currently working as an Assistant Professor at Antalya Bilim University, located in Turkey. Her research interests include energy security and natural gas. Her most recent research is the academic monograph on Turkey's energy security regarding natural gas, which is the background and subject of this issue's discussion.

Dicle Korkmaz :Turkey's role on natural gas pipelines is limited

Turkey’s geopolitical location is crucial as the country lies between energy producers and consumers. Turkey is close to 72 % of the world’s proven gas reserves, and the EU market, which consumes approximately 400 billion m³ of natural gas annually. Turkey’s natural gas consumption is also high. Turkey is expected to consume 60 billion m³ of natural gas in 2021. Turkey’s proximity to energy-rich regions provides opportunities for the country to establish a trading natural gas hub. This is one of the goals of Turkey’s energy policy. The expectation is to have gas-to-gas competition in a trading hub. However, as I tried to elaborate on in the book, geopolitical opportunities are not sufficient to establish a trading natural gas hub.

In addition to foreign supplies for Turkey’s consumption, Azeri and Russian gas are also transported to Europe via Turkey. Starting from the Turkish-Georgian border, TANAP carries Azeri gas until the Turkish-Greek border and then merges with Trans Adriatic Pipeline (TAP) connecting Greece and Italy. It has a capacity of transporting 6 billion m³/year natural gas for Turkish consumption and 10 billion m³/year for the European one. As for Russian gas, the Turk Stream Pipeline consists of two strings, 15.75 billion m³/year per each, to carry Russian gas for both Turkish and European consumption. Therefore, Turkey’s geopolitical location is significant for not only itself but also energy exporters and importers. However, the extent to which Turkey can utilize its significance in its negotiations with foreign suppliers is a question we need to think about. There are different narratives on this issue, which were elaborated on in the book.

Regarding fossil fuels, we should keep in mind that political problems in the Middle East and the Eastern Mediterranean, and the high transportation fees of TANAP (Trans Anatolian Natural Gas Pipeline Project) create obstacles. Moreover, bearing in mind Turkey’s dependency on imported gas and the EU’s aim to reach net-zero emissions by 2050, I think we need to consider Turkey’s geopolitical role concerning the energy transition as well. According to current projections, the hydrogen economy is expected to be worth $500 bn by 2030. The fact that hydrogen can be transported via natural gas pipelines creates new opportunities for Turkey. It has been declared that one-fifth of the capacity of TANAP, without any further investments, can be used to transport hydrogen to Europe. As for renewable energy, Turkey has a big potential. Despite the investments to increase the share of renewable energy in its energy mix, there is still a long way to exploit the full potential. For example, according to calculations, Turkey’s potential to produce electricity from solar power was 1.30 times bigger than its electricity consumption in 2020, thanks to 7.5 hours of daily sunshine in Turkey. Bearing in mind the additional potential in wind, biomass, geothermal and hydropower, we can conclude that Turkey’s geopolitical role is not limited to hydrocarbons but also includes renewables and hydrogen.

In my opinion, completion of the Nord Stream 2 will have an impact on the volume of gas to be transported via Turk Stream. In other words, Turk Stream Pipeline seems to remain with 2 strings. Given the capacity of pipelines and the volume of Gazprom’s exports, there is no need to construct Turk Stream 3 and 4. According to Gazprom’s statistics, the company exported 150 billion m³ of natural gas to EU countries in 2020. Nord Stream I and II will transport 110 billion m³/year natural gas. Yamal-Europe Pipeline has a capacity of 33 billion m³/year in addition to Turk Stream with a capacity of 15.75 billion m³/year. We should also think of 40 billion m³/year gas supplies to be transported via Ukraine until 2024. Furthermore, due to the EU’s energy transition, it is expected that the EU’s gas demand would be 8% lower by 2030 than in 2019. Although the EU’s import dependency is expected to increase because of declining indigenous production, LNG imports may serve as an alternative depending on the price. Therefore, I think, Nord Stream II negates the necessity for more Russian gas via Turk Stream. This is, in a way, a justification for the allegations on Russia using Turk Stream 3 and 4 as leverage in Nord Stream II negotiations. The rationale for Russia in constructing the Turk Stream Pipeline was to bypass Ukraine, to meet its contractual obligations in the Southeastern European markets and, to save the investments already made for the South Stream.

Normally, transportation of less gas via Turkey limits the significance of the country for both the exporter and the importer. Regarding Turk Stream, we should also question the extent to which the Intergovernmental Agreement on Turk Stream between Russia and Turkey rewards Turkey’s significance in terms of geopolitical location. According to the Agreement, the second string of the pipeline transporting Russian gas to Europe via Turkey is owned and operated by a joint venture of Russian and Turkish sides with a 50% share. Furthermore, the Pipeline is not subject to Turkish Regulations. The Russian side has the competence to use 100% of the capacity of the pipeline. These provisions urge questions about whether Turkey is a transit state or just a corridor between Russia and the EU, and whether Turkey fruitfully used its geopolitical location during the negotiations. Here, we need to consider that Intergovernmental Agreement was signed in the shadow of the severe impact of Russian sanctions against Turkey. In other words, Turkey’s role was already designed to be limited.

Interviewer: Qiu Jiayi

Interview time: January 22, 2022

Collator: Zhang Jingyue

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