Summary

Royal Dutch Shell and TransAtlantic Petroleum Ltd. are among the firms that have commenced studies for shale gas extraction in eastern and western Turkey, respectively. On the one side, going by the shale gas production boom, many market experts believe the US is likely to replace Russia as the world's number one gas producer. Others, like the Canada-based Centre for Research on Globalization (CRG), think the shale gas sector in the US is “a gigantic hyped confidence bubble that is already beginning to deflate.” Underlining that the foundations of the global energy system are shifting, Birol said that the changing global energy map is likely to have major implications for regional geopolitics. “Shale gas is emerging as a critical game-changer in the global gas markets. At its highest level in 2012, the gas in European markets was traded five times higher than in the US, while this figure was eight times for Japan, a price difference stemming from this very unconventional gas revolution,” he asserted. Birol said that increases in the number of gas sources will benefit gas importers like Turkey because these countries have the upper hand in bargaining with suppliers for relatively lower tariffs. The hot competition will benefit buyers like Turkey as they will have the chance to buy gas at lower prices when they renew their purchase contracts, Birol said, adding that the same applies for Europe: Gas import contracts with European countries of a total capacity of 156 billion cubic meters per year expire before 2035. Recalling that Turkey's natural gas demand has more than doubled over the past decade to reach 45 billion cubic meters in 2012, Birol said that Ankara has to employ a careful energy policy in its region. “The cost of natural gas from Iraqi resources will be relatively lower; Turkey also needs to focus on these [domestic] markets as soon as possible. … Demand for gas is strong, and large investors will focus more on Turkey,” he said. Turkey eyes boosted role in energy sector with exchange market Another critical topic discussed at Friday's conference was preparations to establish an energy exchange market in Turkey. The country already operates the Market Financial Settlement Center (PMUM), an energy and commodity market, but expects to create a relatively more advanced energy exchange called the Energy Market Management Corporation (EPİAŞ). Planned jointly by the Energy Ministry, the Capital Markets Board (SPK) and the private sector, EPİAŞ is expected to begin operations as an exchange in October. The energy exchange will cooperate with Bourse İstanbul and will aim at create transparency in the market while avoiding volatility in prices. The exchange will initially deal with electricity markets. Mustafa Karahan, head of the Turkish Energy Trade Union (ETT), told Today's Zaman on Friday that they anticipate the planned energy exchange market to cement its role as a major energy transfer corridor for Western buyers while helping the country to emerge as a leading energy storage hub as well. Karahan also said that once a sustainable, reliable energy exchange market has been established in Turkey, suppliers from surrounding markets will begin to store their energy resources here to sell to world markets. “I believe Georgia has such an intention and will be the first to do this, while such others as Iraq can follow once EPİAŞ proves itself.” Turkish authorities are in talks with a number of exchanges similar to the planned EPİAŞ in Europe, one of which is the Deutsche Börse AG. Harry Hinkel from the German company told Today's Zaman on Friday that Turkey has the potential to replicate Germany's success in becoming a critical energy exchange market for its surrounding region and that the company is seeking opportunities to get involved in and provide know-how for the EPİAŞ project. Birol told Today's Zaman that it is also critical for Turkey to boost its energy storage capacity and that the EPİAŞ project should be realized successfully to this end.