Overview

Turkey is becoming increasingly important to the gas industry, not only as a transit state, but as a major gas market in its own right. It ranks in the top 20 largest gas consumers in the world and is liberalising its gas sector, allowing third-party access to transmission and distribution infrastructure in line with EU regulations. This should introduce greater competition into the market and keep prices down.

The prospect of transporting gas from Azerbaijan’s Shah Deniz field to Europe via Turkey has been under consideration for a number of years. Azeri gas would provide Europe with an alternative to its dependence on Russia. A number of pipeline proposals competed for the offer. The Shah Deniz 2 consortium informed OMV in June that the Trans-Adriatic (TAP) pipeline was the favoured project. Turkey is set to benefit from increased supply and become a transit state for Azeri gas.

To accommodate the large volumes of gas flowing to Europe, Turkey is preparing to build the Trans-Anatolian (TANAP) pipeline. This runs the length of Turkey from Georgia in the east to Greece in the west. Turkey will benefit from increased gas supply from Azerbaijan, as its reliance on Russian and Iranian gas has been subject to disruption. However, Ankara needs to address the militant Kurdish organisations carrying out attacks on energy infrastructure on its eastern border which have also disrupted energy supplies.

Turkey has a growing population and per capita wealth, which will increase demand for energy; as a result, the country faces a future heavily reliant on imported hydrocarbons. The government plans to build two nuclear plants, which, after a 40 year struggle, are now finalised and the partnerships are in place. Construction is expected to begin in 2016 and the first reactor should be operational by 2021. This should displace hydrocarbons used in power generation. The country has an ambitious target of 30% of power generation to be met by renewable technologies by 2023, which would also reduce the country’s reliance on hydrocarbons.

Page updated: 30/07/2013