Iraq’s north and the eastern Mediterranean are the two regions where Turkey can be a game-changer in the world’s energy outlook, a prominent expert says. ‘Turkey can contribute to the rewriting of the rules of the game,’ says Mehmet Ögütçü, noting that it will otherwise be playing a game written by others
While the US will rise as the new superstar of the energy world, Russia’s role will diminish, says expert Mehmet Öğütçü (R). Turkey will benefit as Russia will be obliged to reduce gas prices, he adds. DAILY NEWS photo/ Emrah GÜREL
Barçın Yinançbarcin.yinanc@hurriyet.com.trThere is a whole new game shaping up in the world energy outlook, and Turkey can contribute by writing the new rules, according to Mehmet Ögütçü, a prominent energy expert.
There are two regions in which Turkey can especially be a game-changer, northern Iraq and the eastern Mediterranean. Turkey needs to engage with the Kurdish administration in the north without alienating the central government in Baghdad, said Ögütçü. As for the eastern Mediterranean, Ögütçü urged the government to let the Turkish private sector negotiate with its Israeli counterparts in order to remain in the game when relations improve with Ankara’s erstwhile ally.
What are the new game changers in the world energy outlook?
There is an economic and financial power shift from the West to the Asia-Pacific. There is a strong demand for growth coming from the Asia-Pacific. Supply regions are changing. The Middle East is losing its dominant position in world energy. What we have in addition is that the United States is emerging as the new global energy superstar. By 2017, the U.S will become the world’s largest natural gas provide and by 2020, it might replace Saudi Arabia as the largest oil producer. The U.S. will no longer depend on the Middle East. The role Russia is playing as the world natural superpower will diminish. There are new gas-producing countries in the world, like Australia, Tanzania and the Arctic region, as well as the eastern Mediterranean – this will make the market abundant. There will be a glut in natural gas and the prices will decline. Russian economy depends heavily on revenues coming from natural gas. Turkey will also benefit from the falling of natural gas prices.
In sum; the global game in energy has changed; the rules and the players are changing.
Will the U.S. exit the Middle East?
There are three reasons for the U.S. presence in the region: the security of Israel, the protection of Gulf sheikdoms and the containment of Iran. But U.S. ability to project power in the region is declining as a result of domestic developments and due to its intention to refocus its attention toward the Asia-Pacific.
But this does not mean that the U.S. will totally disengage; this will happen gradually. There is no power to fill the gap. This brings Turkey into the picture. When you look at the region, Turkey is the biggest economy. Turkey is, by definition, a regional power to reckon with. Although for the past years, it has pursued a foreign policy which positioned it as a soft power welcomed by the Middle East, the situation started to change when Turkey became confrontational and interventionist in Syria. Confronting Iran, Iraq, and freezing relations with Israel boxed Turkey into a situation where it cannot fully utilize its soft power, which had benefited it over the past decade enormously. Turkey should not waste this opportunity and return to its more non-confrontational soft power approach so that it will be recognized as a benevolent power bringing blessings to the region.
How will relations with Russia be affected?
Turkey is surrounded by hugely energy-rich neighbors. As a result of game-changing developments, if Turkey handles its neighbors smartly and carefully, it will benefit significantly, especially by reducing the prices of energy it imports. Russia will be forced to renegotiate the prices down. Turkey will continue to diversify its sources of supply. Our current heavy dependence on Russia will have to be reduced by more flows coming from Azerbaijan. Russia also used to have very strong geopolitical influence in its backyard in Central Asia and the Caspian region. China has become a real game-changer in Central Asia with huge investments in Turkmenistan. Strong links to Kazakhstan and Turkey, being the most Western end of Asia, is clearly a strategic priority for China; it is getting added importance in the eyes of the Chinese.
Why is that? Does China need a partner in the region?
Without Turkey, you cannot exert influence. For China, Iran has been traditionally the bridgehead to project power to the Middle East and Central Asia. This has changed withIran becoming isolated. China is flirting with Ankara.
Will the U.S. and China be competing to get Turkey on their side?
All the powers will be doing this. Turkey is no longer an obedient ally of anybody. Turkey gain self-confidence. It tells the U.S. “I am an ally but also a partner on equal footing. I will care for my own interests; don’t expect me to blindly follow what your interests are.”
But the Arab Spring showed that Turkey’s interests are more aligned to that of the U.S., rather than China.
I don’t think the Syrian matter will be a shaper of policy. The Chinese hate any intervention in domestic affairs. They also see that the current situation in Syria is not tenable.
Coming back to energy issues, what is your analysis of Turkey’s energy policies?
Turkey wants to be a regional energy hub. But being a hub is not only about pipelines crisscrossing your territory. What’s needed first is that you have to have physical infrastructure to bring gas and oil to the country, and you have to have the right legal infrastructure. You have to create the right institutions. You have to be very reliable in times of peace and conflict. Turkey has to be careful there; sometimes I hear statements like we will be holding the valve and turn it on and off as we wish – that is not a good signal to consumers and investors. You have to have a full commitment to the totally free flow of energy resources.
Turkey needs to give the message that it will not use its energy policies for political purposes.
Exactly, but as of now, we don’t inspire such confidence. We are overplaying our hands sometimes.
In the past, we were down playing [ourselves]. Assertiveness is not always a good thing in international relations. Sometimes you need to act with a sense of humility and modesty.
Turkey is the only power in the region that can continue to fill the gap that the U.S. will be leaving behind. This will not be the old Turkey; it will be looking for its own self-interest but also engaging internationally as a responsible player. Turkey is diversifying its portfolio in keeping up with the power shifts in the world.
This requires management responsibility. How will it manage all these webs of relations? Turkey does not have the sufficient capacity right now to manage all these webs of relations. We need to reinforce Turkey’s institutional capacity human resource capacity to deal with these complex opportunities and challenges. We need to do this in a soft, non-confrontational manner.
How do you see the situation with the Kurdistan Regional Government (KRG)?
If Iraq becomes the second-largest oil producer in the world in the next 15 to 20 years, the whole world will be eyeing Iraq, and we need to engage Iraq with this long-term prospect in mind.
There is a dilemma; Turkey has been forced to make a choice between Arbil and Baghdad. We had an excellent relationship in the past with [Iraqi Prime Minister] Nouri al-Maliki. Now the situation is deplorable; it is not in the interest of both sides.
The relationship between Ankara and Arbil are exemplary. A de facto economic integration is taking place between Turkey and the KRG. It has become a strategic relationship.
Relations are at a point of no return. But this rapprochement between Turkey and the KRG has given rise to concerns in Baghdad, in Tehran, Moscow and even Washington.
Ankara has to take a long-term view and not act in an environment of heightened emotions. There is an emotionally charged rivalry between Erdoğan and al-Maliki. My advice is to take a long-term, prudent, non-emotional approach which will not alienate Baghdad. We should not lose Iraq. Turkey should continue to engage the KRG but in a low-profile and discreet manner.
There are two regions Turkey can be a game-maker in energy: The KRG and the eastern Mediterranean. The other areas are gone – we are very small players there. We can become major players and even kingmakers.
Can you tell us about the energy prospects in the eastern Mediterranean?
It has enormous resources that will be a game changer. All experts tell us that this gas-rich region could become a significant provider of gas to Europe and Turkey. Israelwants to sell it to Turkey. But because of the problems we have with Israel, we have almost stopped collaboration in those areas. Energy is a strategic commodity; it requires long times to invest and bear fruit. If we lose the window of opportunity today in diverting eastern Mediterranean gas through Turkey to Europe, we will lose it forever – they can build LNG terminals or pipelines bypassing Turkey. You might still have your rigid policy vis-à-vis Israel, but I would urge Turkey to let its private sector go and negotiate with the Israeli private sector, so that when we have better relations with Israel. In this way, we will still be in the game; otherwise, we will be pushed to the outside.
How about the Cyprus dispute?
Because of these discoveries, the Cyprus problem will be impossible to resolve.
Greek Cypriots will always insist on their sovereignty and on the lion’s share of the resources. Turkey will be also very jealous of protecting its own exclusive economic zone and the interests of Turkish Cypriots.
In sum, you seem to see more opportunities than challenges, provided Turkey endorses the right course of action.
[All this is possible] provided Turkey develops a new sense of energy diplomacy that will not contradict our foreign and security policy; it is currently conflicting. On the one hand, we need energy resources, but we have very conflicted relations with some of the countries.
The game is changing; if Turkey does not actively engage in this process, it will be playing a game written by others. Turkey has the potential to contribute to the rewriting of the rules of the game.
Who is Mehmet Öğütçü ?
Mehmet Öğütcü is a prominent energy figure on the world stage, having worked as aNATO research fellow, Turkish energy diplomat, International Energy Agency principal administrator for the Asia-Pacific region, a head of the OECD Global Forum and director of the BG Group, a global gas major.
He is currently the chairman of the Global Resources Corporation, a regional energy, finance, investment and strategy group that is based in London.
He also serves as a board member and strategic adviser to a dozen of multinational companies and governments around the world.
He has extensively written on energy, investment, risks and geopolitics, particularly for China, MENA, Eurasia and Turkey. He was most recently appointed as special envoy for the energy charter secretary-general for the MENA region.
February/25/2013
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