Turkey serves as a vital energy corridor supplying natural gas and oil from energy rich countries in Central Asia and the Middle East to energy consuming countries in Europe. Numerous pipelines run through the country pumping oil and natural gas from energy rich countries in the east to energy consuming countries in the west. The Nabucco pipeline, expected to become operational in 2014, will supply one-third of Europe’s total natural gas demand from countries in the Caspian Sea region. The pipeline will run from Turkey to Austria via Bulgaria, Romania and Hungary with possible suppliers of natural gas being Azerbaijan, Iraq, Egypt, Turkmenistan, Syria, Qatar and Kazakhstan. Considering almost two-thirds of the pipeline runs through Turkey, the country holds a major role in the project. With its completion, Europe will receive energy from diverse and alternate sources.
Aside from the Nabucco pipeline, Turkey supplies energy to Europe through other pipelines such as the Shah Deniz. The Shah Deniz natural gas pipeline was completed in 2007 and supplies natural gas to Turkey and Greece. Azerbaijan will supply between 2-6.6 billion cubic meters per annum (bcma) of gas for 15 years to Europe through Turkey. The Baku-Tbilisi-Ceyhan (BTC) pipeline started operation in 2006 and transports one million barrels of oil per day through Turkey from the Caspian basin to the Mediterranean.
Although Turkey has relatively low production of oil and natural gas, many prospects are waiting to be explored. Turkey has explored for oil and gas in only 20% of the potential offshore prospects. Turkey’s public oil and gas company, Turkish Petroleum Company (TPAO), has many prospect licenses providing opportunities for foreign companies to establish a partnership with TPAO to explore for oil and gas. TPAO has currently been concentrating on exploring for gas and natural oil in South America and are working with Petrobas, Brazil’s oil giant to search the region.
Turkey has also become a main generator of Central and Eastern European regional power generation. By 2013, it is expected to account for 10% of the region’s power, remaining a net exporter of electricity to neighbors. Between 2007 and 2018, Turkey is forecasted to increase electricity generation by 72.5%, near the top of the range for Central and Eastern European region.
Turkey also has one of the highest potentials for wind generation in Europe and has taken a huge step in pushing wind power. The 2005 Renewable Energy Law, lowering taxes for electricity from renewable sources, started a wave of applications for projects. By 2006, the market in Turkey had doubled and tripled by the end of 2007. The Market Authority EMRA has licensed 78 projects constituting 2,900 megawatts (MW) or capacity. In May, a subsidiary of Zorlu energy group received a €130m loan to build Turkey’s biggest wind farm. Wind power is expected to increase by 35% when the project begins operating by the end of the year.
Turkey’s role as a global energy corridor signifies its leadership in the region. Turkey has become one of the fastest growing energy markets in the world. Forecasts indicate a growth trend of 6-8% per year will prevail in the energy sector.