Ten events that shaped Turkey’s energy sector in 2016

From switching to domestic currency for energy payments, to the TurkStream gas pipeline and a cooperation deal between Turkey and Israel — this year has been a busy one for the nation.

Photo by: AA
Photo by: AA

Turkey's Energy Market Regulatory Association says imports of quantitative crude oil reached 20 billion tonnes in 2016.

Updated Dec 31, 2016

Taking steps to reduce its reliance on external energy sources, Turkey developed its domestic capacity and ramped up its role as an international energy hub in 2016.

1. Gas prices were at the centre of a spat with Iran

Turkey’s power capacity and renewable energy resources have increased threefold in the last 14 years, according to the government. And since 2001, Turkey has had a deal in place to buy around 10 billion cubic metres (bcm) of gas from Iran every year, but the financial cost is high.

The deal met setbacks this year. Turkey filed two cases in the International Court of Arbitration in 2012 against Iran that concluded on February 2.

Under New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, both states agree to enforce foreign arbitral awards as if they were domestic court judgements, and agree to limited reasons to set aside or an award. [AA]

One of the cases dealt with higher gas prices — and that case was resolved in favour of Turkey. The second case related to deficiencies in gas distribution, and the court sided with Iran.

2. Stake sale in Akkuyu Nuclear Power Plant

On April 27, 49 percent of the shares of the Akkuyu nuclear power plant, the first of its kind in Turkey, went up for sale. Some Turkish businesses are in the process of buying into the deal.

The plant’s first unit for operations are expected to be completed in 2022.

The foundation of the offshore hydraulic engineering structures of the "Akkuyu" nuclear power plant was laid in April 2015. [Akkuyu Nukleer]

3. Turkey and Israel mended fences, and Eastern Mediterranean gas followed suit

In June, Turkey’s normalisation of diplomatic ties with Israel paved the way for the two nations to participate over natural gas projects in the region of Israel and the East Mediterranean.

Both countries agreed to open discussions on building a gas pipeline to pump Israeli gas into Europe.

Energy Minister Yuval Steinitz of Israel said that his country would "be glad to see Turkish companies involved in Israeli energy sector including in the exploration of gas fields.

Both countries improved ties six years after the Mavi Marmara incident had strained their diplomatic relations.

The relationship was damaged after Israeli soldiers killed ten civilians in a Turkish vessel in international waters that aimed to help the Gazan people.

4. A Sino-Turkish agreement on nuclear energy changed things up

In September, Turkey made a deal with China to cooperate in the peaceful use of nuclear energy.

The deal is a step needed to open the way for China potentially building Turkey's third nuclear power plant.

China is Turkey's third biggest trade partner worldwide after Germany and Russia, and its biggest in the Far East, according to Ankara's Foreign Ministry. [AA]

The deal was initially signed in 2012, but went into effect in when Turkey published the news in its official gazette.

The 23rd World Energy Congress held in Istanbul

In October, Turkey hosted the 23rd World Energy Congress. The energy sector’s great and the good — policymakers and executives in the energy world — came together to speak about the sector’s new frontiers.

President Erdogan said Turkey’s growth rate, especially in the last 14 years, has been above the world average and Turkey’s energy demand has increased by 6-8 percent per annum. [Presidency of Turkey]

At the Congress, energy ministers of Organization of Petroleum Exporting Countries (OPEC), the oil cartel, and non-OPEC countries met in September to review a prior decision taken in Algeria to reduce global oil production. All sides agreed to continue to talk about cutting oil production and stabilising prices in future.

Russia, which is not the member of OPEC, said that the decision of slashing oil production was "productive," but that it needed to satisfy other countries.

Russia’s Energy Minister Aleksandr Novak said higher production led to a decrease in oil prices and as a result, investor confidence was low.

The price of Brent crude reached $27 a barrel in January, the lowest level since December 2003. And today, amid the talks of reducing oil production, the price has gone up to $57.

"In the last two years, investments [worldwide] were reduced to $450 billion," Novak said while explaining the impact of increased production on energy sector.

In Algeria, OPEC member countries agreed to cap the group's total production at 32.5 million barrels per day, down from 33.64 million.

6. The TurkStream pipeline was revived

Russia and Turkey inked the TurkStream deal in October to establish a pipeline network between Russia and Turkey. The network will enable Turkey to supply gas to southeastern Europe.

The TurkStream Project is being planned and developed by Gazprom, a Russian gas company. Its estimated cost is at least $12.6 billion.

7. A Turkey-Turkish Cyprus energy protocol pact was signed

In October, Turkey and the Turkish Republic of Northern Cyprus (TRNC) signed an energy protocol on the sidelines of the Energy Congress.

The deal aims at constructing an undersea electricity cable to link the two countries. The project will enable energy to be transported to the southern parts of the Middle East, TRNC Energy Minister Sunat Atun said.

Turkey's Energy and Natural Resources Minister Berat Albayrak (right) and TRNC Economy and Energy Minister Sunat Atun signed a deal on sidelines of the 23rd World Energy Congress in Istanbul. [AA]

The agreement between Turkey and TRNC includes upgraded electricity infrastructure, the development of power supply security, the construction of interconnected systems, cooperation on renewable energy, the application of electricity regulations, as well as exploration for new oil and natural gas resources.

8. Leadership of SCO’s Energy Club

Turkey’s President Recep Tayyip Erdogan was elected as the chairman of the Shanghai Cooperation Organization’s (SCO) Energy Club for 2017.

The SCO members control three-fifths of Eurasian territory, holding about 25 percent of global oil reserves, over 50 percent of gas reserves, 35 percent of coal, and about half of the world’s known uranium reserves.

Erdogan improved relations with the SCO after the European Parliament advised the European Union to suspend ties with Turkey.

9. Turkey and Venezuela inked a cooperation deal 

Turkey and Venezuela signed an extensive cooperation agreement regarding the energy sector in November, aimed at developing and promoting the oil, gas and petrochemical industries.

Turkey also plans to fund the optimisation of existing port and transportation systems in northeastern Venezuela in exchange for petcoke, a fuel that is a cheap byproduct of the oil refining process. [Presidency of Turkey]

The governments said they would exchange information and experience in the development of the energy sector.

The two nations are also set to promote joint investments that explore and extract hydrocarbon resources, as well as market the end products.

10. Turkey might pay for gas using its domestic currency

Turkey’s Energy Market Regulatory Authority (EMRA) announced in December it would use the Turkish lira in the future to trade gas with countries that have vast energy reserves. 

"We have taken steps also to do trade with Russia, China, and Iran in our local currency," Erdogan said.

Author: Ali Topchi

TRTWorld and agencies