Turkey’s natural gas hub: the end of a dream?

Al-Monitor Pro Members

Gerald Kepes

President, Competitive Energy Strategies, LLC

July 22, 2024

Since the fall of the Soviet Union and successful domestic economic reforms of the 1990s, Turkey’s leadership and business elites dreamed of becoming the “Suez Canal” of the 21st century global gas business, in addition to providing alternative routes for crude oil flows to Gulf and Central Asia countries. The absence of a domestic resource base and its geostrategic position between the largest high-value gas market in the world (Europe) and the abundance of oil and gas resources in the Middle East and greater Central Asia provided Turkey with a unique opportunity to work toward these aspirations. In line with its economic modernization, Turkey’s energy consumption grew incredibly fast. Discovery of large natural gas resources in the Black Sea in 2020 and the eastern Mediterranean earlier added new local and regional supplies and an opportunity to swing between foreign supplies and domestic sources in its quest. The dream of enhanced geostrategic heft and significant revenues from transit and trading fees seemed closer than ever.

Unfortunately for Turkey, these dreams will not be realized. Russia’s invasion of Ukraine in 2022 turned Europe away from Russian gas, and massive increases in US LNG gave Europe a new geopolitically safer and more competitive source of gas. Apart from Azerbaijan, Central Asia gas is now seeking markets in China. Disputes between Baghdad and the Kurdish regional government have cutoff oil supplies through Turkey. As for its domestic gas, Turkey does not have adequate funding and capacity to fully appraise Black Sea resources, and disputes with Cyprus (and more recently Israel) have ruled out Turkish transit to European markets for those resources.