Saturday, 24 May 2014

Ceylan Ozbudak

Almost all the developments surrounding Turkey in the last months such as the Ukraine-Russia-EU crisis, the Israel-Turkey normalization process, Joe Biden’s visit to Cyprus, andthe biggest mining accident in the history of Turkey remind us of one thing: energy.

Between the producers in the Caspian Basin, Central Asia, the Middle East and the European and international energy markets, Turkey’s energy politics and diplomacy over energy affect a very wide range of countries from different angles.
The Middle East angle

By lowering the costs of desalination and increasing the supply of fresh water, the newly found natural gas reserves of the Mediterranean coasts can contribute greatly to the elimination of water conflicts in the region. The new natural gas volumes have already increased water supply in the region.

The Middle East is also one of the few regions where electricity is still largely produced from oil; consequently power generation is expensive and highly polluting and electricity supply is unreliable. Stable supplies of natural gas could strengthen economies in the region by providing cheaper, cleaner power and augmenting water production for agriculture.

Reliable supplies of electricity at affordable prices can prove a critical factor to the economic and political stability of states in the region. Let’s remember frequent electricity blackouts contributed to public anger with both President Hosni Mubarak and President Mohammad Mursi and played a role in their respective downfalls.
What happens in Iraq does not stay In Iraq

The ties between Ankara and the Kurdistan Regional Government (KRG) in Erbil, Iraq, have been given a boost by several energy deals but it also sparked international reactions, as the central government in Baghdad expressed discomfort about the exports. Iraqi Kurdistan began selling its oil independently of the federal government in 2012 through Turkey by truck.

Reliable supplies of electricity at affordable prices can prove a critical factor to the economic and political stability of states in the region
Ceylan Ozbudak

A Turkish company called Powertrans has acted as broker for the Kurdish government, selling the oil via tenders to traders such as Italy and Germany. After Baghdad opposed the action, claiming that Kurdish economic independence could threaten Iraq’s unity, Turkey decided to wait for Baghdad and Erbil to resolve their differences. After five months of talks and little progress, tanks at Ceyhan are now full of Kurdish oil, and Turkey decided there was no point in further obstructing exports.

As of this Thursday, the first 1 million barrel cargo was loaded at Ceyhan pipeline of Turkey, which is likely to annoy Baghdad. Baghdad has cut the region’s share of the budget to punish it for building the new pipeline, and oil sales can provide the Kurdistan Regional Government with desperately needed income. While Germany and Italy are keen to be the first buyers of Iraqi oil, raising concerns about the implications of Turkey’s direct dealings with the KRG for Iraq’s territorial integrity, the U.S. has made apparent its uneasiness with Turkey’s involvement and deemed the exports of Iraqi oil be declared illegal.

Turkey’s Minister of Energy Taner Yildiz, however, insisted that Turkey would stand behind the existing arrangement since the U.S. did not interfere with its own businessmen reaching deals with Erbil without the consent of Baghdad. Surely, Turkey’s main objective in this matter is not limited to being an energy expert but to have an upper hand in the Kurdish region concerning a PKK connection.
Israel and Turkey ties

Energy resources can start wars and they can help foster peace. The latest gas discovery by Israel in the Leviathan field in the Mediterranean Sea will not only be warming the houses of Israeli citizens, but also the relations of Israel with Turkey.

For Israel to become an energy exporter, both Cyprus and Turkey need to get connected through pipelines to transport Israeli gas to Europe, from underneath the sea through land via Turkey and through shipping in tankers with the help of a condensation factory to be built in Cyprus.

These are the reasons, which brought Joe Biden to Cyprus this week to help reconciliation between the sides and these are the reasons why Turkey and Israel are in a rush to fully normalize relations.

Israel is not in a position to decline a 20-year contract offer made by the Turkish energy company Turcas Petrol for seven billion cubic meters of gas annually. On the other hand, If Israel is seriously considering selling its gas; she has to endure Turkey’s demands in the normalization process since trying to liquefy and ship the gas would present serious – and expensive – security risks.

Turkey on the other hand, needs to adopt a more reconciliatory tone. The Israeli Navy is not as strong as its air forces and according to Lieutenant Ilan Lavi, Israel needs to invest at least $700 million dollars into its navy to secure the shipping of Israeli gas if an agreement with Turkey’s pipelines cannot be reached.
The European Union and the Russia angle

In one of my previous articles I wrote that sanctions to Russia – if applied – would only further damage European economies and Russia could end up exporting its rich natural resources to the rapidly-rising East. Only a few weeks after this, Russia and China signed a 30-year, $400 billion deal for Gazprom to deliver Russian gas to China, providing 38 billion cubic meters of gas annually. Being the largest gas agreement in the history of Russia the Putin Land once again tore the European sanction card apart.

The crisis-stricken EU, if an alternative gas supply is not provided in three years time, will have to pay more for the natural gas starting in 2018. While this is considered as a step to a neo-Cold War, there is one development on Turkish soil which can relieve the stress of the EU states; the Southern Gas Corridor project.

Turkey will play a key role in energy route structuring with the Southern Gas Corridor project, which will supply Europe with gas from Azerbaijan, and will also have the capacity to carry extra gas from northern Iraq, Turkmenistan and possibly Iran. The project will reduce Europe’s dependency on Russian energy while increasing its dependence on Turkish pipelines. The SGC will be going through Turkey like a superhighway, primarily carrying the riches of the Caspian Sea for energy dependent Europe.

Because of the strategic liability of being dependent on foreign natural resources, Turkey looks to increase safety regulations on its 700 coalmines but not shut down the operations despite the heavy loss we witnessed last week. Turkey needs new partnerships and improve the functioning of its energy market to increase its standing in energy geopolitics and feed its thriving new industries. While the West mishandled their democratic intervention in Ukraine, taking solid steps in being an indispensible energy hub and increase its clout in the international system seem to be exactly what Turkey has been doing lately.


Ceylan Ozbudak is a Turkish political analyst, television presenter, and executive director of Building Bridges, an Istanbul-based NGO. As a representative of Harun Yahya organization, she frequently cites quotations from the author in her writings. She can be followed on Twitter via @ceylanozbudak
Last Update: Saturday, 24 May 2014 KSA 10:14 – GMT 07:14