Turkey’s large dependence on energy imports provides a unique opportunity for investors and explorers as the government carves a path toward energy independence.
Turkey’s dependence on foreign energy has led to the creation of an energy importation infrastructure of pipelines, storage and processing sites.
While the EU preferred Turkey to be a transit country through which pipelines pass without a say in transactions, Turkey wanted to be an energy hub, middle-manning energy transfers across the region.
The Baku-Tbilisi-Ceyhan oil pipeline and the Trans-Anatolian natural gas pipeline (TANAP) pass through Turkey, providing an alternative supply route from Azerbaijan to assist Europe in diversifying its energy sources.
Turkey has four liquefied natural gas (LNG) plants, two of which are floating storage and regasification units. A third floating storage and regasification unit is being developed in the Gulf of Saros. Its location near maritime routes allows Turkey to import and re-export LNG to Europe.
The storage capacity of the Silivri natural gas storage facility was increased from 3.2 billion cubic meters of gas to 4.6 billion cubic meters. Capacity is being increased at the Tuz Gölü natural gas storage facility, intended to attain 5.4 billion cubic meters this year.
Turkish foreign policy is driven by energy insecurity. Securing its energy source is important for Turkey as its foreign dependence represents a significant vulnerability, and the country sits in an area of geopolitical complexities where energy is often used as a lever.
An additional vulnerability is its reliance on pipeline delivery. Four crude oil pipelines and seven international natural gas pipelines traverse Turkey, bringing 84 percent of natural gas imports.
Affordable energy prices are critical for maintaining political and economic stability. Pipelines are susceptible to radicals’ actions, specifically in Turkey’s region.
In 2022, the volume of gas discovered in offshore fields of the Black Sea was announced as 710 billion cubic meters. About 10 million cubic meters of gas per day is expected to be pumped through the offshore gas pipeline in its first phase, while the infrastructure is in place to increase production up to 40 million cubic meters.
In Southeast Turkey, Trillion is engaged in oil exploration in the Cudi-Gabar province, where it holds a 50 percent interest and is funding 100 percent of the costs of the project exploration. The area is surrounded by major oil discoveries, including the nearby Sehit Aybuke Yalcin and Sehit Esma Cevik fields, which are rich in oil reserves.
ARAR, a private Turkish energy company, holds a portfolio of production and exploration oil and gas assets, including the Urfa and Hatay blocks in Southeast Turkey.
While not primarily engaged in exploration and production within Turkey, TotalEnergies plays a significant role in the country’s energy supply chain and has been strengthening its position in the Turkish energy market through strategic partnerships. The company has signed a 10 year agreement with Turkey’s state energy firm BOTAS to supply 1.1 million metric tons of liquefied natural gas annually starting in 2027.
Control over multiple international energy routes grants Turkey geopolitical leverage with Europe and energy-producing countries in the east. There is serious potential for Turkey to grow in its role as a regional energy hub, with future possibilities for hosting additional pipelines from the Eastern Mediterranean and the Gulf. Investors would do well to understand the various opportunities for investing in Turkey’s energy sector.
This INNSpired article was written according to INN editorial standards to educate investors.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.
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