- The Writer holds聽an MSc in Eurasian Political Economy & Energy聽from King鈥檚 College London and聽also an聽MA in European Studies from Sabanc谋 University.
In order for Turkey to establish a establish a natural gas hub in the region, it needs to further utilize its unique geographic position and take measures to improve its status in moving away from merely being an energy transit corridor. Among all the changes required, Turkey needs to improve its gas storage and other infrastructure including its pipeline network.
Almost 98 percent of natural gas consumed in Turkey is imported, making Turkey heavily reliant on gas exporting countries - Russia, Iran, Azerbaijan, Nigeria and lastly Algeria. During the cold winters, Turkey needs extra volumes of gas to meet demand at peak times.
Specifically, the escalation of tensions and/or commercial disputes between Turkey and other gas providing countries has raised questions for policy makers as to whether Turkey can cope with the challenges of gas interruptions that might stem from political conflict or any other technical hitches.
Turkey has two main operational gas storage facilities. Its facility in Silivri, which is owned by Turkish Petroleum, has recently been transferred to Turkey's state-owned crude oil and natural gas pipelines and trading company, Petroleum Pipeline Cooperation, BOTAS. The facility is located in the northwestern part of the Marmara region, with a capacity of 2.66 billion cubic meters (bcm) and a withdrawal rate of 20 million cubic meters (mcm) of capacity, which has not reached the necessary level to change Turkey鈥檚 current energy bridge or corridor status into that of a hub. The expansion of the current capacity withdrawal to 30 mcm is planned for 2017.
The second gas storage facility is in the province of Aksaray- in Sultanhani with a total volume of 1.5 bcm. Although it is not yet operational, in the province of Central Anatolia, another project is underway in Tuz Golu, which is projected to provide a capacity of 480 mcm once completed. The Turkish Ministry of Energy and Natural Resources also has plans to invest in extra storage capacity to increase Turkey鈥檚 resilience, at least to a degree of 10 percent in excess of domestic consumption in the years ahead. For this reason, additional capacity that is evenly dispersed geographically, and well-connected to national networks, is required to better supply the country as a whole.
In 2015, Turkey saw the second biggest growth in natural gas consumption after China, making Turkey vulnerable to internal as well as external energy shocks. Countries like Ukraine has 34 bcm of storage capacity, Italy has 16 bcm, the Netherlands and Germany have 10 and 24 bcm, respectively, while Turkey鈥檚 storage facilities lag behind these countries which consume similar volumes of gas.
Tim Boersma, fellow and acting director of the Brookings Institution's聽Energy Security and Climate Initiative noted that the benefits provided by underground storage facilities include 鈥渇lexibility, and can be commercially interesting, provided there is enough variation between seasonal gas prices.鈥�
Given the capacity of the gas storage facilities currently operational in Turkey, it appears that the country is nowhere near meeting the demands of a country that consumed approximately 50 bcm of gas in 2015.
The Ukrainian ambassador to Turkey, Sergiy Korsunsky, has recently come up with a proposal to strengthen relations with Turkey for whom spare gas storage capacity can be made available, suggesting "We guarantee that whatever you put in you will receive it back whenever you need it. We have spare capacity of at least 17-18 bcm. We recommended to BOTAS that Turkey can put approximately 17-18 bcm of gas into storage. Then, if market conditions are favorable, Turkey can sell it to Europe. If it鈥檚 unfavorable, you can consume it or keep it,鈥�
On May 17, 2016 in an interview with the Anadolu Agency, he further elaborated on the challenges that Turkey would likely face in the near-term by noting, 鈥淚t would be good if you have bigger storage. Unfortunately, Turkey does not have this geology on its territory. I think this is a problem and that is why we are working with Turkey to allow Turkish companies to use our storage in Western Ukraine. We don鈥檛 have a deal yet, but Ukraine鈥檚 Naftogaz and Turkish BOTAS are holding discussions."聽
Currently, Turkey鈥檚 storage capacity can only meet 5 percent of its gas consumption. Although, the Ukrainian ambassador鈥檚 proposal might meet Turkey鈥檚 current needs in the short-term, from the energy security point of view, Turkey should be aiming to have around 10 bcm of storage capacity over the mid-term.
In addition to the problem of inadequate storage capacity, price fluctuations as well as changes in seasonal demand have also put a strain on Turkey to the extent that the construction of additional gas pipelines has become one of the prerequisites for meeting these and other similar unpredictable challenges. A high-pressure natural gas transmission network, which has been established in Turkey with a length of 15,000 kilometers, is inadequate in comparison with many other of the world鈥檚 biggest gas consuming economies, and this is a hindrance to Turkey realizing its full economic potential.
Securing gas supplies at peak times and in times of gas disruptions requires advanced storage facilities. For a country like Turkey in pursuit of a goal of becoming an energy-trading hub, spare capacity is necessary to allow energy consuming countries to also benefit. However, unless Turkey constructs sufficient storage facilities along with additional extensive pipelines, deficiencies in improvements will remain an impediment to the goal of an energy hub. 聽
One suggestion to remedy this problem in the short term is to address the fact that the storage facilities in Turkey are state owned and continue to be run by the state. To overcome the capacity shortages and increase the overall resilience of the Turkish gas market, private companies should be encouraged to participate in building new facilities.
- Opinions expressed in this piece are the author鈥檚 own and do not necessarily reflect Anadolu Agency's editorial policy.聽