23.11.2015
EMBASSY OF THE REPUBLIC OF KOREA
ENERGY NEWSLETTER
The Washington-based think-tank Atlantic Council's 7th Energy and Economic Summit was held in Istanbul between November 18-20, 2015. The summit aims to bring together top business executives, prominent figures from the international energy industry, and decision-makers from Central Asia, the Middle East and Europe and create a platform that will provide solutions to economic, energy, sociopolitical and security issues in the world.
Turkish President Recep Tayyip Erdogan had made an opening speech at the summit. Croatian President Kolinda Grabar-Kitarovic and Iraqi Prime Minister Haider al-Abadi had also attended the summit.
Turkey to invest $125 billion in energy by 2023
Energy and Natural Resources Minister Ali Riza Alaboyun held a speech at the Atlantic Council's Energy and Economic Summit in Istanbul and stated that Turkey is realizing significant projects in natural gas, nuclear energy and renewables in its geo-strategic location between the energy consumer and supplier countries.
And he declared: "Turkey will have doubled its energy capacity roughly by 2023. It will be 130 gigawatts in 2023, compared to today’s installed capacity of 72 gigawatts. We are determined to reduce our dependency on natural gas for electricity generation". He noted that Turkey's energy demand increases 7 percent per annum and in order to meet the growing demand, Turkey plans to invest $125 billion in the energy sector by 2023.
Mega energy projects uneconomic for Europe: US official
Amos Hochstein, special envoy and coordinator for the International Energy Affairs of the U.S. Department of State, during his speech at the Atlantic Council's Energy and Economic Summit stated that mega energy projects are not economic for ensuring European energy security and suggested that Europe should focus on cheaper options for its energy security, instead of multi-billion energy projects. He declared that Nord Stream II will create more divisions in Europe, and continue Europe’s dependency for Russian natural gas. He regarded Nord Stream II not a solution but creation of a new problem. Mr. Hochstein, however, pointed to the Southern Gas Corridor as a solution which includes the TANAP project.
Ukraine considers LNG option through Turkey
Volodymyr Demchyshyn, Ukrainian Minister of Energy and Coal, during an exclusive interview at the Atlantic Council's Energy and Economic Summit, stated that the use of Turkey's LNG terminal would seriously be considered an option as part of Ukraine's strategy to diversify energy sources. The minister asserted that 2016 will be the year of LNG, as the product is becoming more competitive. He suggested that LNG could be transported through Turkey to Ukraine through the country's two terminals, one which is currently underutilized. However, the issue of transferring it through the Bosporus would have to be overcome.
According to the Montreux Convention regarding the regime of the Straits, it is not easy for Turkey to have a say on the trade ships, but Turkey can influence the control of traffic on the Bosporus. "Turkey also can store gas there too to handle peak consumption in winter," the minister suggested.
Resources:Enerji Gunlugu, Sabah Daily News, Anadolu Agency
Important Notes from the Atlantic Council Energy
and Economic Summit
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Latest Improvements Regarding Turkish Stream Project
Alexander Novak, Russia’s Minister of Energy stated on 12 November 2015 to RIA Novosti news agency that Russia is ready at any time to continue talks on the Turkish Stream natural gas pipeline and declared: “To continue the negotiations on the Turkish Stream, we are waiting for the new team of officials to be determined by the Turkish government after the November elections.”
On the next day, Vladimir Putin said at an executive interview that Turkish Stream natural gas pipeline project is not slowing down and goes in line with Russia’s and Turkey’s interests but it requires elaboration and added
“The main thing is that this project is fully in the interests of both Russia and Turkey. We are one on this with my Turkish colleague Recep Tayyip Erdogan.”
Turkish President Erdogan and Russian President Putin held a bilateral meeting during the G-20 Summit in Antalya and discussed about the progress of Turkish Stream project. It is reported by the Turkish and Russian media that the bilateral meeting had positive outcome and a “go” decision was made for the project by the two presidents. One day after the bilateral meeting, on 16 November 2015, the Gazprom CEO Alexey Miller stated that the Turkish Stream project might be implemented shortly since an agreement has been reached with the Turkish side that the pipe via the Black Sea will be run in the same corridor as the South Stream on which all examinations and preliminary work have been carried out already and which already has pipes in Bulgaria ready for assembly. However, he did not give exact timeline of the project’s implementation and stated: "All depends on signing of the intergovernmental agreement." On the same day, Energy Minister Alexander Novak declared that the agreement is unlikely to be signed in December 2015 as the Turkish government hasn’t been formed yet. Additionally, as reported by Putin’s spokesman Dmitry Peskov, the Turkish President Erdogan has confirmed that Turkey is interested it the Turkish Stream pipeline project.
Alexey Miller stated to Tass News Agency that Russia and Turkey will hold a meeting for the progression of the Turkish Stream natural gas project in December this year and said: "The top level strategic cooperation council between Turkey and Russia will be held and the project will be negotiated at an intergovernmental level in December."
In the meanwhile an expert from Bulgaria, Tatiana Mitrova told Anadolu Agency: "I don't think at any time will we hear about the cancellation or termination of this project. There could be delays, or a reduction in capacity, but one or two lines are very probable. The equipment from the first line of the cancelled South Stream project has been bought and paid for and is waiting in Bulgaria to be used in the Turkish Stream project. Now Gazprom has to pay only for the construction itself. It makes much more sense to build this pipeline rather than leave the pipes laying in Bulgaria without any application,” and stressed that Russia is examining all possible options to bypass Ukraine for natural gas transfer.
According to Jonathan Stern, chairman of gas research at the Oxford Institute for Energy Studies, the first pipeline of the Turkish Stream natural gas project will definitely be built, probably before 2020.
Change of EU’s Attitude? The terror attacks in Paris and emergence of collective fight against terrorism have led to softening of EU’s attitude towards Russia which was observed during the 7th Atlantic Council Energy and Economy Summit held in Istanbul last week. Experts discussed Europe's energy relations with Moscow and possibility of lifting sanctions on Russia after Paris attacks. Ana Palacio, member of the Spanish Council of State and the former Minister of Foreign Affairs of Spain, hinted at the possibility of lifting sanctions on Russia in return for Moscow's cooperation against Daesh in Syria, and called for a stronger U.S. presence in the Middle East for the security of Europe. Friedbert Pfluger, a nonresident senior fellow of the Atlantic Council, advocated for the lifting of sanctions against Russia in return for Moscow's assistance in Syria, and emphasized that energy is a significant factor for stable relationships between Russia and Europe.
Consequently, on 19 November 2015, a statement that was released on the European Union's official website affirmed that Europe fully supports three energy projects that are of critical importance for the realization of the Turkish Stream natural gas pipeline, and declared them to be "primary" projects that will also make Turkey an energy hub for Europe.
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Latest Improvements Regarding Turkish Stream Project – cont’d
The statement signifies a critical support for the Turkish Stream project, which is planned to carry Russian natural gas to Europe via the Turkish-Greek border. The main project that was stated to be supported by the EU is the Tesla pipeline, which will be a pillar of the Turkish Stream and reach Austria from Greece. Tesla pipeline will be 1,400-kilometer-long, which is expected to be completed in 2019 and will carry 27 billion cubic meters of natural gas annually. The line, which is said to be a "critical threshold" for the Turkish Stream, is known as an additional pipeline that will extend the Turkish Stream into Austria. It is said the Tesla pipeline will carry Russian natural gas via the Turkish Stream and Azeri natural gas via the Trans-Anatolian Natural Gas Pipeline (TANAP) to Europe. The second project that was announced to be supported by EU is the TANAP project and the third project to be supported is the Trans-Caspian Gas Pipeline that will carry Azeri and Turkmen natural gas to Europe. The EU's declaration of these projects as "primary" means Brussels has toned down its attitude, which has so far been frosty toward the Turkish Stream.
These latest developments regarding especially Turkish Stream might be interpreted as the construction of the Turkish Stream pipeline is becoming more certain and as Brussels has toned down its attitude towards Russia or it can be only a temporary attitude change in order to get Russia’s support for Syria issue. The meeting of the two leaders, Erdogan and Putin, on 15 December 2015 is of vital importance regarding the Turkish Stream project; therefore, it will be closely observed.
To remind, regarding Turkish Stream project, Turkey is to build the 265-kilometer part of the pipeline passing through in its own borders, while the section beneath the Black Sea will be constructed by Russia. The gas from the first line is completely designed for the Turkish market, while the remaining capacity is set to be carried to the Turkish-Greek border, where the creation of a gas hub is planned. Construction of the project was set to begin in June 2015, but it is still under discussion.
Resources:Enerji Gunlugu, Sabah Daily News, Tass News Agency, Anadolu Agency
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Akkuyu NPP
Energy and Natural Resources Minister Ali Riza Alaboyun declared that the new Turkish government must ratify three urgent legislative regulations for the country's first nuclear power plant, Akkuyu. Russia is waiting for the formation of a new Turkish government to pass through the relevant regulations to progress the project. Mr Alaboyun declared: "Russia wants to make progress on the Akkuyu Nuclear Power Plant project"
stressing that Russia already provided 3 billion dollars for the construction of the plant. The regulations cover:
nature conservation namely olive groves in the region as well as coastal law on governing the handling of nuclear materials; guarantees for the purchase of energy from the Energy Market Regulatory Authority's (EMRA); and the licensing for sales contracts on energy from the plant.
In the meanwhile, Necati Yamac, deputy secretary of Turkish energy ministry made important declarations at a conferece in Ankara regarding the commissioning dates of the two nuclear power plants. He stated that Turkey's Akkuyu NPP will start electricity generation in 2022 at the latest and noted: "Licensing is proceeding fast in Akkuyu". Mr. Yamac declared that the first reactor of Sinop NPP will be commissioned in 2023. Mr Yamac stressed that Turkey is 72 percent foreign-dependent in energy imports and added that the country spends $60 billion annually for energy imports. Therefore, he emphasized that the nuclear power for Turkey is inevitable.
Resources:Anadolu Agency, IEA Website
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Iranian Oil Minister Zangeneh declared that Asian market is priority for Iran's crude oil exports and added“We plan to expand exports to the Asian market. It is of top priority due to its proximity” and emphasized that before sanctions on Iran, 60 percent of Iranian crude was sold to Asia, while 40 percent was sent to Europe.
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Azizollah Ramazani, the director of International Affairs of National Iranian Gas Company (NIGC) andchairman of the board of National Iranian Gas Export Company (NIGEC), declared that Turkey still remains the preferred route for the transfer of Iranian gas in the post sanctions term to Europe despite other alternative routes available. He said “Other routes could be through Iran-Armenia-Georgia and onto the Black Sea, or from Azerbaijan to Georgia to the Black Sea, or from Iraq, Syria, the Mediterranean and then to Europe.
Another option could be to store natural gas as liquefied natural gas, despite the cost." He added that Turkey is one of the best routes since Iran already crosses the country and could also supply gas to Turkey. "We strongly consider this option more than others," as Iran is technically and politically ready for this option, he said.
