If you could not see the e-mail click to see via your browser 02/11/2012
TPQ - FNF Roundtable Discussion
31 October 2012, Istanbul
The "New Game" of Energy in Turkey
and its Neighborhood .

On 31 October 2012, Turkish Policy Quarterly (TPQ), in partnership with the Friedrich Naumann Foundation (FNF) and with the support of BP Turkey, hosted a roundtable discussion titled "The 'New Game' of Energy in Turkey and its Neighborhood." The panelists of the event were Ambassador Matthew J. Bryza, Director of the International Centre for Defence Studies in Tallinn; Reha Aykul Muratoğlu, Head of Transit Petroleum Pipelines in the Ministry of Energy and Natural Resources of Turkey; and Jean-Arnold Vinois, Acting Director for Internal Energy Market of the Directorate General for Energy at the European Commission.

Mohammed Al Khalifa

In her opening remarks, Nigar G?ksel, editor-in-chief of TPQ, who chaired the discussion, pointed out that TPQ has been holding roundtable meetings on the Southern Corridor for three years now. Since last year's event, she noted how much had changed in the Southern Corridor debates. One year ago the Trans-Anatolian gas pipeline (TANAP) project was barely on the agenda, the transportation of northern Iraqi resources to Europe through Turkey seemed a more distant prospect, natural gas reserves had not been discovered in the Eastern Mediterranean, and energy infrastructure security was not as high on the agenda. Indicating that regional geopolitical developments are intricately related to pipeline politics, Ms. G?ksel noted that the discussions would try to bring Turkey's relations with countries such as Russia, Azerbaijan, Iran, Iraq, Syria, and Israel into the fold. In addition to assessing recent developments regarding the Southern Corridor, she noted that this event aims to assess how Turkey is playing its geostrategic hand, how the EU's common energy policy is evolving, and what role the U.S. might play for the realization of the Southern Corridor.

Ambassador Matthew J. Bryza began his speech by stating that the Southern Corridor and TANAP are inevitable realities. TANAP makes commercial and geopolitical sense, he stated, explaining that it would enable Azerbaijan's natural gas to launch the Southern Corridor, with additional Azerbaijani gas, Turkmenistan's offshore reserves and northern Iraqi gas perhaps following in the future, linked to well-paying markets of Europe; moreover, TANAP would strengthen the links of Turkey and some of its key neighbors to the Euro-Atlantic community, marking a dramatic and historic shift in the geopolitics of Iraq. The only remaining questions are not whether, but how quickly the route will be completed, how it will be expanded in the future, and which export route will transport this gas deeper into Europe.

The issue of the potential transfer of Eastern Mediterranean gas to Europe from Cyprus and Israel was also touched upon by Ambassador Bryza. Economically, the most attractive export route would be from the Republic of Cyprus to the northern part of the island then via pipe to Turkey and Greece. This economically most sensible solution could also help catalyze progress on a political settlement of the Cyprus question, which is of great interest to the EU and Washington. But he warned, "Economic interests will not drive a resolution of the Cyprus dispute, but it can offer a push." Also, according to the Ambassador, the deadlock in Turkish-Israeli relations would need to be overcome. Bryza emphasized that it is crucial that the Turkish government not lose strategic focus.

Mohammed Al Khalifa

Reha Aykul Muratoğlu explicitly stated that the Energy Ministry's first priority is to secure Turkey's energy needs in a timely and affordable manner to provide its citizens' needs. The second priority, he said, is to establish energy links between upstream and downstream interest holders. Dr. Muratoğlu noted that Turkey's geostrategic importance depends more on its ability to be a gas transit route, as opposed to oil which could be transported rather freely. Providing an evolution of the negotiations regarding the transport of natural gas from Azerbaijan to Europe through Turkey, Muratoğlu stated that previously the demand side was driving the pipeline process while, with TANAP, a producer country is in the forefront. Having accomplished the agreements on the Southern Corridor, he said, Turkey and Azerbaijan signed two sets of agreements on 26 June 2012, during which both countries' leaders expressed their dedication to a stand-alone gas pipeline. More recently, he added, Turkish participants of the project started to negotiate the respective shareholders agreement which will enable Turkish participants to commercially integrate into the TANAP project, and soon the State Oil Company of the Azerbaijan Republic (SOCAR) will carry out negotiations with potential partners who are likely to come from the structure of Shah Deniz phase-II partners.

Dr. Murato?lu also brought up the critical issue of the sanctions against Iran. He stated that; unlike Europe, where there is no physical flow of Iranian gas, Turkey is not in a position to abandon importing this gas in the near future. Since, he said, "Iranian gas forms 20 percent of natural gas consumption of Turkey, and Turkey is not in a position to leave this gas, which is contractually and physically impossible." Also commenting on Iraqi gas, Dr. Murato?lu stated that it is one of the most important potential resources for both Turkey and Europe. "From a governmental perspective," he said, "our expectation is to create more competition by using the Iraqi gas, which may give a message to other gas suppliers to Turkey, such as Russia and Iran, with the exception of Azerbaijan, since they provide the cheapest gas supply to Turkey for the time being." Additionally, Dr. Murato?lu confirmed that nuclear energy is needed as a base load in electricity generation, and therefore still on the agenda while enhanced usage of renewable sources and energy efficiency are still among the priorities.

Mohammed Al Khalifa

Jean-Arnold Vinois began his speech by noting that in the energy issue, the consumer side is as important as the producer side, and right now, Europe is the second largest gas consumer in the world. He mentioned the EU's 2050 roadmap for energy which outlines the trajectory of energy consumption for the EU's he next 40 years. "This is a subject which has created some irritation with Russia," he said, "because the prospects for gas consumption in the EU are not that what they were expected to be."

He pointed out the three pillars of energy policy of the Union, which are: reducing overall energy consumption, diversification of energy portfolio ? which includes the promotion of renewable energy sources, and finally, in light of global warming, decreasing carbon emissions. Considering the recent developments in the renewable energy sources in Europe, Mr. Vinois stated that the EU might head towards these additional resources to satisfy its demand, unless there would be more suitable options for natural gas in terms of prices. Furthermore, he underlined that TANAP was inspired by the concept Nabucco put forth.

In the lively Q & A section that followed, prominent journalists, politicians, scholars, and business people enriched the debate by adding their comments on the issues discussed and brought up various other topics such as the funding of TANAP, the future of Nabucco, the situation of the energy chapter in Turkey's EU membership process, the prospects of an independent Kurdistan, the steps taken for the security of energy infrastructure by Ankara, and the nuclear plant under works in Turkey.

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