Turkey's Emerging Petroleum Dominance

In the past ten years, Turkey's economy grew with an 8.5% GDP increase in 2011 after a 9% rise in 2010, with the income per capita reported to increase between 50% and 200%. Large economic shortfalls were covered by the country's rise by their energy resources (oil and gas), of which the energy demands also increased. Many thanks to Dr. Anthony Cordesman and his colleagues at the Center for Strategic and International Studies, Congressional Research Service, the Institute for Strategic Studies, US Department of State, and the Central Intelligence Agency (CIA) for supplying the data from their archives for the opportunity to analyze and reframe current policy. In 2012, imports of 91% of oil, and 98% of natural gas, with the expected energy demand to rise 4% annually through 2020. Turkey's energy transportation makes it attractive for European states wishing to diversify their energy resources away from Russia, with it's strategic position between suppliers in the Caspian, and it's lack of energy resources. Maintaining 4-6% of the world's oil supply making it the main transit point, it holds many major natural gas and oil transportation networks. Turkish oil concessions are, 1) connecting Russian and Caspian oil to the world markets-thru the Bosporus Straits (2.9 million bbl/d in 2009), 2) Kirkuk-Ceyhan pipeline (1.65 million bbl/d), and 3) Baku-Tbilisi-Ceyhan pipeline (1.2 million bbl/d), connecting Azeri-Chirag-Guneshli oilfield in the Caspian Sea to the Turkish port of Ceyhan on the South East Mediterranean coast. The connection of the Shahs Deniz gasfield in the Azerbijani sector of the Caspian Sea is thru the Baku-Tbilisi-Erzurum pipeline (1.05 Tcf) and goes to Erzurum in Eastern Turkey. The Russian gas distribution network in Ankara is connected thru the Blue Stream pipeline. Iran's natural gas reserves to Turkey is via the Tabriz-Ankara pipeline (49 Bcf). Disruption of Turkish supplies is by Iranian stoppages and PKK attacks on the border between Iran and Turkey. The Russian gas distribution network to Istanbul is via Romania-Bulgaria-Turkey pipeline (630 Bcf). Turkey being a bridge to Europe will be vital to the South Europe Gas Ring Project by connecting Turkish and Greek gas grids via the Turkey-Greece pipeline (420 Bcf). Supply and reduction of energy problems have been on the forefront of Turkish politics. Overland and alternate shipping routes had to be developed because of the congestion in the Bosporus Straits. An alternate shipping route is the Istanbul Canal (Between Black Sea and Marmara Sea), which is rerouting 160 ships a day will prevent maritime accidents and reduce ships traveling the Straits. Reduction in oil shipments transiting the Bosporus will eradicate one of the world's busiest choke points. The Istanbul Canal will open in 2020 with an 10 billion dollar pricetag after eight years of work despite the opposition. The build-operate-transfer contract will have a bidding time of 6 months, with the Feasibility studies lasting two years. Acting as an energy bridge to Europe, several projects to transport gas and oil to Europe are underay thru diversification of their energy imports. Through the Turkish territory to Europe, the hydrocarbon resources of Turkey will go uninterrupted. The European countries are looking at Turkey as an influential and critical partner in the "Great Game" (Caspian and their transportation to Europe), to eliminate their dependance on Russian energy sources. Europe's dependance on Turkey, 1) diversifying their energy resources, 2) increase revenues, 3) increase the regional stage importance, and 4) helps the country satisfy their energy needs. Gas and oil to Europe is being negotiated by six competing proposals from the Shah Deniz gas fields with more resources from Central Asia and the Middle East. The proposed oil and gas pipelines are, 1) Nabucco pipeline (1.1 Tcf): European gas diversification, transporting Iraqi and Caspian gas to the Central European gas hub in Baumgarten an der March Austria. It is fed by the BTE pipeline in Georgia and a future Iraqi pipeline or using the Tabriz-Ankara pipeline. 2) Nabucco West pipeline (350 Bcf): is fed by the Trans-Anatolian pipeline-planned by the Nabucco Consortium that includes the European section of the pipeline., 3) Turkey-Greece-Italy Interconnector pipeline (10 Bcf): planned extension of the completed Turkey-Greece pipeline, connecting Greece with pipelines in Southern Italy., 4) Trans-Anatolian Gas pipeline (570 Bcf): Connects the Caspian gas to Europe from the Georgian-Turkish border to the Turkish-European border, and connects to Nabucco West when built., and 5) the Samsun-Ceyhan pipeline (1.5 million bbl/d):Crude oil pipeline running North-South, connecting Samsun in the north of Turkey to the Mediterranean port of Ceyhan. It will reduce tanker traffic in the Bosporus Strait providing an alternate route to the Mediterranean. Contracts for projects in Turkey, Russia, Azerbaijan, and Eastern Europe will help to supplement existing pipelines to Europe. Europe will be supplied by, 1) north-south route: using the Blue Stream and future South Stream pipelines supplied by Russian gas, 2) east-west route: with the Baku-Tbilisi-Ceyhan pipeline, the future Trans-Anatolian pipeline, the improved Turkey-Greek Interconnector, and the Nabucco West pipeline supplying Caspian, Central Asia, and the Arab gas first. Europe is not affected by the Russian North-South Stream pipelines. Russian supplies reduction will decrease Moscow's control over the pipeline network, increasing EU energy security involving Turkey. October 2012 saw EU sanctions banning Iranian gas imports for Turkey's own use to supply any future pipeline for diversification of Europe's gas imports. Too large for the current supply of Azeri gas from the Shah Deniz fields, Turkey wanted to supplement it with Iranian gas. ALU scholars concur with CSIS on suggestions to, 1) Turkey and the EU have to look beyond Azerbaijan's Shah Deniz field (cannot fill the 30 bcm (1 Tcf)) pipeline, if they want the TANAP/Nabucco to come on line as commercial, 2) Iran is a logistical and technical point; with the EU sanctions on Iran and the Baku-Tehran tensions it will not happen making Turkmenistan the alternate supplier for TANAP/Nabucco, 3) additional Caspian pipelines will make Turkey a regional energy bridge to Europe, diversifying it's energy imports, 4) Iraqi-Turkish and Iranian-Turkish pipelines are not dependable for reliable energy, and 5) the 10 Bcm/year (billion cubic meters per year) that Iran contracted to supply have decreased due to mechanical failures, Iranian Layoffs, and PKK attacks. Iran's natural gas is expensive. March 2012 saw Iranian gas spike to $500/1000m3 (increase from $423/1000m3), while 2011 Turkey paid Russia $418/1000m3 and Azerbaijan $282/1000m3. In comparison Turkey paid Russia $400/1000m3 and $330/1000m3 for Azeri gas. Iran has sued Turkey resulting in negative relations between them. ALU scholars amended their analysis to reflect, 1) Turkey taking on a partner (US, NATO, Iran, China, and Russia) in a joint effort to finance and build the pipelines, allowing the countries to acquire the diversity that they so much seek, 2) it would ease the tensions between these countries to the point renegotiations can be started and sanctions lifted, 3) an alternate suggestion will provide for smaller countries to help build sections of the pipeline and trade oil for other resources (increasing their GDP), and 5) strengthen Turkey as a regional power.