Turkey’s five year energy plan
Turkey’s Ministry of Energy and Natural Resources has published a strategic plan for 2010 to 2014 indicating the country’s aims at improved energy security while taking advantage of its geographic location to position itself as an energy transit hub. The goal is to reduce its vulnerability to potential volatility in the import of hydrocarbons such as oil and natural gas for which it relies on much of its energy needs.
The plan seeks to lessen Turkey’s import dependence, not simply by way of tapping into the national energy resources (which are very limited), but by having a renewable energy infrastructure, increasing the use of coal powered generators (which are less susceptible to fluctuations in price and availability), and diversifying its imports so that it is not so dependent on one country (namely Russia) for its energy imports. Turkey imports 2/3 of its natural gas from Russia.
The plan recognizes Turkey’s very limited hydrocarbon capacity: “In the year 2008 the total primary energy consumption of our country has been 108 million Ton Equivalent Petroleum (TEP), and its production has been 29 million TEP.” (1)
Turkey depends on imports of natural gas for about 97.3% of its needs. It produced 1 billion m3 in 2008, and consumed 36 billion m3 in the same year. Only five countries supply it with its natural gas. Russia has been the dominant source between 2001-2009, followed by Iran, Azerbaijan, and Algeria.
To provide it with additional cushion in case of supply of price volatility, Turkey plans to expand its natural gas storage capacity from 2.1 billion m3 (2008) to 4 billion m3 (2014)
Furthermore, Turkey depends on imports of oil for 93% of its needs (2008).
Diversification, in the case of Turkey, means diversifying the country’s imports as well as varying the types of energy it consumes, so that if there is trouble with one source of energy (say natural gas or oil), the incident does not cause as great a disturbance as it otherwise might.
This interest in diversification is tied to a desire for economic and energy security. For this reason, it is interested in renewable energy such as wind, geothermal, and hydroelectric dams. So, we see that a component, perhaps a dominant component, of the interest in renewable energy is tied to national security, so that a country like Turkey would seek to establish domestic electricity production using what little options it has, which in this case falls on renewable sources since it has no serious deposits of hydrocarbons.
By end of 2009, the country had enough domestic oil reserves to meet only one year’s worth of consumption, and natural gas reserves for two months.
The desire to diversify energy has also led the ministry to encourage the growth of coal power. The ministry estimates that only 32% of the potential electricity production based on domestic coal resource availability has been actualized. Over the period of the plan, Turkey plans to complete a number of coal thermal plants, totaling 3,500 MW of additional electricity supplied by 2014.
A central goal of improving the country’s energy security then is to increase the share of domestic generated electricity from hydroelectric dams and coal power plants. Turkey also plans to construct its first nuclear power plant, with an aim to have nuclear energy provide some 5% of total electricity by 2023. The plan indicates a goal to add an additional 5,000 MW to the grid from new hydroelectric projects by the year 2014. It also includes what might be a very ambitious aim of increasing the share of wind power from 802.8 MW (2009) to 10,000 MW by 2015.
According to Turkey’s General Directorate of State Hydraulic Works, hydro power supplied from southeastern Anatolia has provided some “45% of overall hydroelectric generation” to date. (2)
Turkey seeks to become an energy corridor, siphoning natural gas and oil from its south (Iraq), east (Iran, Caspian Sea basin, Central Asia), and northeast (Russia), to Europe. For this it seeks bilateral and multilateral agreements with countries of the affected region.
Turning the country into an energy hub is taking advantage of Turkey’s geostrategic location. The plan states that “Turkey is positioned in a geography where about 72 percent of the proved oil and natural gas reserves of the world are buried, especially at the Middle East and the Caspian Basin. In the period by 2030, the world’s energy consumption is projected to rise by 40 percent and is anticipated to be covered to a significant extent from the resources in the region where we are positioned.” (3)
To this purpose, the ministry focuses on the importance of turning the port city of Ceyhan into an “an integrated energy terminal where various quality and feature of crude oil may be offered for international markets, and where a refinery, petrochemicals facilities and liquefied natural gas (LNG) exportation terminal will be available.” (4)
Ceyhan is part of an existing energy corridor that went into operation in 2006. The Baku-Tblisi-Ceyhan (BTC) Crude Oil Pipeline transfers oil from Azerbaijan through Georgia to Turkey. From 2006 to 2009 oil loaded onto sea transports from Ceyhan totaled 800 million barrels.
Turkey also seeks to import electricity for exporting across its territory by linking up its transmission network with that of neighbouring countries.
The feasibility of the desire to turn Turkey into an energy corridor is in question. It needs to tap into proven reserves of hydrocarbons enough to provide for the markets in Europe. For this, it would need to lay down infrastructure to these regions by competing with or coming to agreements with potential suppliers in Central Asia and the Middle East as well as dealing with the main overland corridor that currently runs through Russia.
One of the key aims, according to the strategic plan, is “Aim-4: Making the free market conditions operate fully and providing for the improvement of the investment environment.” (5) The way was paved for the liberalization/privatization of the energy sector by way of the Electricity Market Law (2001), the Natural Gas Market Law (2001), the Oil Market Law (2005), the Liquified Petroleum Gases Law (2005), and the Market Law (2005).
The plan estimates that the total investment required in the energy sector is more than $120 billion by 2020. Theoretically, privatization is supposed to help bring private investment on-side.
The public sector is stepping back from directly creating electrical capacity, wanting the private sector to take the lead. Since the passing of key privatization laws starting in 2001, 12,850 MW of new capacity has been generated between 2002 to 2009, 7,000 MW of which was due to private sector construction.
The ministry has also been moving toward deregulating the pricing model of the energy market. Free floating pricing has increased from nearly 30% of the electricity market in 2004 to 50% in 2009.
The ministry’s view of consumers is interesting here, integrating the language of liberal economics into their perception of what are persons, now identified as “natural or legal persons” (individuals or corporations). This has an impact on the emerging role of corporations as empowered legal person within the framework of a liberalized political and economic model, giving them many of the rights generally reserved for individual citizens under law. One of the main advantages posited here for consumers is the freedom to choose between various distributors, and it is assumed that this will lead to competition that will increase efficiency in generation and distribution, and also reduce prices. This assumption though has not led to this fact in many cases of partial or near full privatization around the world such as in Canada’s province of Ontario, and within the US, where prices have often increased and supply has not matched demand.
(2) Accessed May 13, 2010 http://www.dsi.gov.tr/english/service/enerjie.htm
(4) Ibid., p. 31.
(5) Ibid., p. 22.