How does Istanbul’s new gas trading center enhance Türkiye’s ambition in the energy market? | economy
IstanbulTurkey is close to achieving its ambition to become a regional center for gas trade, amid expectations that it will reach its goal by next year, with the progress of Ankara and Moscow talks in this regard.
Turkish Energy Minister Alp Arslan Bayraktar recently announced that talks with Russia regarding establishing a gas trade center in Istanbul are progressing rapidly, and the project comes as part of a broader vision to make Turkey a strategic center for energy trade in the region, at a time when Russia is seeking to compensate for its losses in the European market.
Vigorous negotiations
This step comes within the framework of Ankara’s efforts to strengthen its role as a major hub in the regional and global energy market.
The Turkish Minister of Energy said, in an interview with the Turkish newspaper “Millit”, that Turkey has prepared a strong infrastructure for a commercial platform, in cooperation between the Turkish “Botash” company and the Russian “Gazprom” company, which will operate within the Istanbul Financial Center.
Bayraktar confirmed that a memorandum of understanding was sent to the Russian side, and that Russian President Vladimir Putin gave instructions to Gazprom to work on the project.
He added that the Istanbul Gas Index will be created, which means that gas prices will be determined in Istanbul, and Russia will sell gas based on the prices included in the index.
The minister indicated that this step comes within the framework of Türkiye’s efforts to become a regional center for natural gas, as it continues to negotiate with global producers and consumers, and aims to increase its imports and exports of natural gas.
It is worth noting that the idea of establishing this center is reinforced by Moscow’s desire to compensate for the sales it lost in European markets.
Global Energy Center
In light of the geopolitical changes that are reshaping the global energy map, Türkiye’s role is emerging as a pivotal strategic player in the natural gas trade.
Academic researcher Ismail Kawaz believes that Turkey has a strategic geographic location that makes it a natural bridge between energy-producing and energy-consuming countries. This unique location gives it a competitive advantage compared to European natural gas trade centers, such as Austria, France, and the Netherlands, which suffer from geographical distance from energy-exporting countries.
Speaking to Al Jazeera Net, Kavaz explains that this proximity to producing countries allows Turkey to obtain natural gas at a lower cost, which enhances its ability to provide competitive prices and contributes to achieving regional and global stability in the field of energy.
The academic specializing in economics and energy confirms that establishing a trading exchange for natural gas will enable Turkey to transform into a major center for repricing and re-exporting imported natural gas, which will bring it great economic benefits.
Kavaz believes that this transformation will contribute to attracting huge foreign investments and open the way for international energy companies to cooperate with Turkey, thanks to its strong infrastructure, which plays a vital role in global gas markets that rely on long-term contracts and the liquefied natural gas futures market.
He points out that Turkey relies on a strong network of national and international pipelines to support its role as a regional energy center, and among the prominent projects that contribute to achieving this goal are the “Turkstream” project, the “Blue Stream” project, and the Trans-Anatolian Natural Gas Pipeline (TANAP).
Kawaz stresses the importance of increasing the storage capacity of natural gas, as Turkey plans to raise its storage capacity to 12 billion cubic meters by 2028. This expansion in storage supports the sustainability of gas consumption locally and strengthens Turkey’s position as a global energy hub.
He points out that the current pipeline network in Turkey, such as the Baku-Tbilisi-Erzurum line (BTC) and the Turkey-Greece line, enhances its ability to play a pivotal role in the gas trade, and Turkey also possesses natural gas storage and reoperation units. Liquefied stations, such as “Durtul” and “Ertugrul Ghazi” stations.
Regarding the impact of the Ukrainian war on energy relations between Turkey and Russia, Kavaz points out that Russian President Putin’s statement at the end of 2022 about the possibility of establishing a natural gas commercial center in Turkey reflects confidence in its ability to realize this project.
The Turkish academic adds that the tensions between Russia and Europe pushed Turkey to the forefront as a reliable mediator in securing energy supplies, which strengthened its position in the global equation in this regard.
He stresses the importance of Turkey’s role in diversifying European energy sources, especially with the heavy reliance on Russian gas, as the Caspian Sea region and the Eastern Mediterranean provide important alternatives, making Turkey an essential link for transferring energy resources from producing countries to European markets.
Kavaz explains that this project constitutes an example of the “triple win” principle, which brings benefits to Turkey and energy-producing and consuming countries alike.
The only option
With the complexity of traditional Russian gas transportation routes as a result of the Ukrainian war and Western sanctions, Türkiye has become the only logical option for transporting Russian gas to Europe, according to experts.
The head of the Center for Turkish Energy Research, Policy and Strategies at the Middle East Technical University, Oguzhan Akiner, points out that the talks between Turkey and Russia regarding establishing a natural gas trade center are not new, but have extended for years, but they have gained great momentum in the recent period due to the tense geopolitical conditions, and may accelerate. After Trump won the US presidency.
Akiner confirms to Al Jazeera Net that this project is the most logical option in light of the challenges facing traditional Russian gas transportation routes, especially after the bombing of the Nord Stream lines and the expiration of other routes through Ukraine and Belarus.
Akiner explains that the US sanctions imposed on Russia have prompted Europe to try to diversify its energy sources, but it is still dependent on Russian gas because of its sustainability and low economic cost compared to American shale gas.
The energy expert points out that the temporary decrease in European demand for gas may not last long, especially with the arrival of the harsh winter, which will lead to the rapid depletion of stocks and the return of demand to rise.
Akiner explains that the current TurkStream line is the only gateway for transporting Russian gas to Europe. The line consists of two routes with a total capacity of 31.5 billion cubic meters annually, with ambitious plans to double this capacity by adding new routes.
He confirms that the natural gas trade center project in Istanbul is in line with old Russian plans that seek to make Türkiye a regional center for gas distribution, which was proposed before the Russian-Ukrainian crisis.
Akiner believes that Turkey has become the only option for Russia to secure its gas supplies to Europe, as the establishment of a gas trade center in Istanbul will ensure the achievement of Moscow’s goals in preserving its European markets, and strengthen Turkey’s position as a main link between energy producers and consumers, which enhances energy stability. In the region.
