ISTANBUL – Delegates to the 23rd World Energy Congress, organized by the World Energy Council under the patronage of the Turkish President Recep Tayyip Erdoğan, spent nearly a full week (Oct 9-13) along the shores of the Bosphorus discussing the future of energy in the face of the new challenges and demands that the global economy is facing.
In the final statement of the congress, the organizers pointed out that “the next decade will begin to define the winners and losers of the energy transformation, making it crucial to understand the new realities for the energy sector.”
The profound increase in energy demand from the global middle class, the countries’ failure to de-carbonize their economies, the risk for existing assets to end up stranded, effects of the increasingly extreme weather on energy, technological breakthroughs in production, changing roles in global energy governance, and the need for supporting entrepreneurship were among the “new realities” debated during the congress.
Energy issues are vital for the sustainability of economic growth in both the developed and the developing world, while a long-term vision is required to face the emerging realities of the energy sector and to prepare for a world of fast increasing population and rapidly depleting fossil fuel reserves.
The congress has surely proven to be useful as a platform for dialogue for actors of global energy, including presidents, ministers, CEOs, NGO representatives and scholars.
However, in addition to a grand vision, energy security concerns are related to more pressing and concrete issues as well, such as new investments, pipeline deals, production quotas, and price levels. On the sidelines of the World Energy Congress, such issues were also discussed and some remarkable steps were taken, such as Russia’s announcement of support for a supply deal with the Organization of Petroleum Exporting Countries (OPEC).
Turkey, as the host country, has been one of the most active parties in this respect, and for the energy policy makers in Ankara, the summit brought three important gains.
First, participation in person by the Russian president Vladimir Putin was important, as it marked, together with Erdoğan’s visit to St. Petersburg in August, a positive turning point in Turkish-Russian relations after the crisis that erupted following the downing of a Russian jet by Turkish planes.
During the congress, Turkey and Russia signed — after two years of consultations, cancellations and a troubled relationship — the intergovernmental agreement for the construction of the Turkish Stream pipeline, which will take Russian gas from the Krasnodar region, beneath the Black Sea to Turkey and further to European markets. Turkish Stream has an important position in Turkey’s energy strategy, as Ankara aims not only to secure its own energy needs, but also to consolidate its position as an energy transit route between the producers in Russia and the Caucasus on one hand, and the consumers in Europe on the other. With the Turkish Stream project finally set in motion, Turkish-Russian relations can be expected to gain momentum, which will also affect the two sides’ dealings in political and regional issues.
Second, a total of eighteen separate memoranda of understanding were signed by Saudi Aramco with Turkish companies during the World Energy Congress. These are mainly companies active in the fields of energy and construction and the deals made will allow the Turks to bid in Saudi Aramco’s tenders in the future.
Saudi Aramco’s CEO Amin Nasser stated that it is an opportunity for “Turkish companies to bring in their expertise and invest in the Kingdom’s future” and the agreements will pave the way for the Turkish private actor to increase its influence in the Saudi market through new energy-related projects.
Third, a meeting held by the Turkish energy minister Berat Albayrak and his Israeli counterpart Yuval Steinitz on the sidelines of the congress has been noteworthy in terms of its timing and content. The meeting was held only a few days after the Turkish parliament ratified the agreement for the normalization of relations between Turkey and Israel. Energy is a common denominator for the two countries, as Turkey is interested to transmit the newly discovered Israeli gas from Eastern Mediterranean fields to European markets, and for Israel, taking the gas through Turkish territory is the only feasible option.
After the meeting, Steinitz announced that he and Albayrak “discussed the option of constructing a pipeline that will carry gas to Europe via Turkey” and “decided to open a special channel of dialogue between the two governments to further consult this issue.” In other words, energy cooperation is likely to complement the normalization agreement as a facilitator to bring back Turkish-Israeli relation to pre-crisis levels on the basis of mutual benefits.
During his opening speech at the congress, Erdoğan said Turkey will “take critical steps later this year and during 2017 and large scale investments in energy will be undertaken” in order to take Turkey “one step closer to its target of becoming a reliable partner for countries in the region.”
The congress in Istanbul has produced important gains to this direction, and new cooperative projects offer the potential not only to help Turkey to strengthen its position in the global energy market, but also to have positive and constructive spillover effects on Turkey’s foreign relations.
Dr. Altay Atlı is a research associate at the Istanbul Policy Center.