Turkey-EU energy chapter will not bring benefits – minister

Opening up the EU’s Energy Chapter for Turkey, a move that would help to fast-track the liberalisation of its electricity and gas markets and harmonise its laws with those of the EU would not bring benefits to the country, the Turkish energy minister Taner Yildiz told ICIS on Thursday.

Negotiations on the chapter, which are part of the EU’s accession procedure, had been put on hold following a unilateral blockage of six chapters by southern Cyprus in 2009. The veto came in response to Ankara’s refusal to allow Greek Cypriot ships and aircraft to use Turkish ports and airports.

However, Turkish private companies have re-ignited discussions about the opening of the chapter, as interest in speeding up liberalisation reforms in the energy sector and the sourcing of natural gas from Cyprus and Israel is growing.

In an interview organised by the EU Delegation in Turkey, Yildiz said Turkey saw itself as part of the EU, but extensive delays caused by Brussels in sending out positive signals had left Turkey to pursue its own reforms in the energy sector.

“We see ourselves as part of the EU, but we are like a living person without an ID card. […] If they [the EU] open the chapter, we will welcome it, but it will not bring a lot of pluses.”

Despite dismay with Europe’s delays, public support for Turkey’s EU accession has shot up from 44% in 2013 to 53% in 2014.

Furthermore, energy companies argue that much-needed reforms such as the unbundling of the state gas company, BOTAS, the creation of transparent, liquid electricity and gas markets and the strengthening of electricity and gas interconnections, which are being pursued by the Turkish government, would happen quicker if Turkish laws and practices were harmonised with those of the EU. They also point to the success of Turkey’s electricity interconnections with Bulgaria and Greece under the umbrella of the European Network of Transmission System Operators (ENTSO-E) which has so far allowed Turkey to take advantage of comparatively cheaper electricity from the EU and said the same links should be replicated for natural gas.

The opening of the chapter, which is one of 33 that Turkey has to negotiate with the EU and transpose into its laws before becoming a member, would also be beneficial to the EU.

Turkey itself is of key importance to Brussels which has been long advocating the establishment of new transit routes for non-Russian gas imports. Thanks to its geography Turkey would be a corridor for the transport of Caspian, Middle Eastern and Levantine gas. The alignment of Turkey’s energy regulations with those of the EU, as outlined in its three energy packages, would guarantee the stability of gas exports to Europe via Turkey.

However, at the beginning of December, Turkey and Russia announced plans to transport 63 billion cubic metres of gas to Turkey and Europe, raising questions about sourcing alternative supplies and Turkey’s role in Europe’s much-vaunted Southern Gas Corridor.

Turk Stream and Blue Stream

The project is designed to bring 50bcm/year of gas to the Turkish-Greek border and will replace the now defunct 63bcm/year South Stream pipeline which was expected to carry Russian gas to Italy and Austria. Critics have argued that southern Europe which has subdued demand will be unable to absorb the vast quantities of gas which will be just fractionally short of Russia’s recently pledged 68bcm/year to China.

Yildiz said the Memorandum of Understanding signed between Turkey and Russia for the building of the project was not legally binding and stressed that the importing activity will be carried out between Russia and EU member states, in particular France, Italy and Germany, which were partners in the South Stream project.

“EU partners will carry out the [new] project and they will need to come up with a solution [as to what they want to do with the 50bcm/year of gas],” he said.

The minister said the 14bcm which Russia pledged to export to Turkey as part of the latest project – alternately dubbed Turk Stream or Blue Stream 2 – would not be in addition to what Turkey already receives through the Western Line which transits Ukraine. However, he noted that the volumes may either continue to be transported through the existing pipeline which feeds the high-consumption western Marmara region or be diverted through the new infrastructure.

He added that if Turkey required more natural gas volumes, Russia would be able to help.

He also pointed out that the additional 3bcm/year that would be shipped through the existing Blue Stream pipeline across the Black Sea, possibly from 2016, would be freed up to the private sector. Aura Sabadus