Dear Mr. Haluk Direskeneli,
Q1- What’s your opinion about the Iran nuke deal and possible outcomes for the oil prices?
A1- I should say that I am not a nuclear expert. Anyhow I feel that Iran nuclear deal is the natural outcome of Obama politics, to reduce international contfrontations through peace talks, and further peace implementations of international nuke applications. Any Republican president in USA can change all these conditions. Iranian nuclear deal is good political engagement between the U.S. and Iran, while it will not change the rest of the disputed subjects, such as relations in the Persian Gulf. Any possibility of the opening of oil and gas related investments in Iran will be good for Turkey and the region. It will create jobs for Turkish contractors and create competition with Russia on especially for natural gas exports. Competition is good for the importing countries like Turkey. It is not a fact that Iran deal will lower oil prices in the long run. We just do not know. I believe nuke deal is the small part of the Iran international integration. The most important thing is the lifting of the sanctions. Iran will be integrated with international environment. Sanctions about currency transaction was causing Iran alot of addional commission costs. Now Iran will attract new internaitonal investors to its oil and gas sector those have needed a lot of investment. Turkey was benefiting from the sanctions because, Turkey imports 10 billions USD of oil and gas each year. The payment of those import was staying in Turkish banking system and transfered indirectly with gold, diamonds and any other goods. Now Iran can can their export Money easily through banking transfer.
Q2- Could you please tell us your opinions about the Turkish Stream?
A2- I believe that an oil/gas expert should answer this question better than myself. I feel that Turkish Stream has nothing to do with Turkish cause, it is beyond public understanding, all drafted and agreed beyond closed doors. There is no appearent gain for Turkey on the face value of agreement at this point in time. We are Unsure of incremental benefits to Turkey. While bypassing Ukraine may increase the supply reliability, allowing more Russian gas will decrease gas competition for Turkish markets. Both Turkey and regional gas markets need more competition from different suppliers. Russia does not want to renew the transit agreements to be terminated in 2019. Russia frustrated from the confict of Ukraine. Ukraine bargains its transit position with Russia. THerefore Russia is despirate to tackle and bypass Ukraine route. They are searching to get rid of possibility of Turkey’s being new Ukraine role. Thus they want Turkey as an immune transit country. They want an integovenrmental agreement above the Turkish constitution
Q3- What’s your opinion about the Mediterranean energy security? What’s the way of the cooperation? How do you see the role of Turkey there?
A3- As long as we have grave differences between neighbors, an moreover there is no long term cooperation between countries, and hence each country will try to find solutions for their own national interests, then Mediterranean energy security is only valid for countries who own the natural resources. Turkey has no gain in developments of Mediterrenean offshore resources. Cooperation should focus on supply routes and sources. Let the free markets determine the cost of energy and provide supply security. Free market monetization of energy sources will create a fair balance between the producers and consumers. The size and geographical setting of Turkey provides a market and an energy hub function. Without the solution of Cyprus issue and UNCLOS partnership of both Turkey and Israel, it is almost impossible to find a amicable solutions
Q4- How do you see the Turkey’s energy relationship between Iraq and the KRG?
A4- There is an Energy source which is very close to Turkey. Turkey cannot neglect that possibility. The region need prosperity. If there is an oil and gas income to the Northern Iraq, it will become attractive for the people living there. To get rid of imigration, Turkey should focus to develop the Energy source in this region. However it is governed by daily politics and I feel that there is no long term policy to foresee. Everything can change overnight. It plays a critical role for Turkish energy supplies, an outlet for KRG outputs and a balancing act between the KRG and central Iraqi Government. Without Turkish export routes, KRG has no leverage on the central Government.
Q5- What are the main investment areas that can be attractive for the foreign investors who are looking for the Turkish energy industry?
A5- renewables, wind, solar, hydro for sure. it is global tendency to reduce global warming.
Turkey should restructure its Energy legal infrastructure There ar huge opportunities in Turkey. But the involment of the goverment to the market forces should be prevented.
Competitive Turkish energy markets with its size and the annual growth rates makes Turkey an attractive place for foreign investments. All renewable energy resources are attractive investment areas.
Q6- How would you describe Turkey’s energy investment opportunities? Could you please tell us something about the incentives for the foreign investors?
A6- I am against to all types of energy incentives, since incentives create bribery, curruption.
The best incentive is working competitive market forces in the market, free market.
I have an article on this subject which was published in IEI web page, to describe why.
Competitive energy markets and energy demand growth in Turkey are good incentives. Current cost structures do not need feed-in tariffs. Good regulatory support and monitoring are sufficient for new investments. Competition is always good.
Q7- What’s the main challenges for the investors of the Turkish energy sector?
A7- project finance is the main challenge for the investors, non-recourse financing should be implemented, however it is too difficult to accomplish due to growing concern on fragile local economy. Main challenge is to let competition and competitive energy markets take the lead. Any Government involvement of energy dispatch, regulations of energy supply (such as feed-in tariffs, Government power purchase agreements, subsidies) are detrimental to continuation of competitive energy markets. The Government should keep providing the legal and regulatory environments for the merchant power plants with non-recourse project financing.
Q8- How do you see the Turkey’s energy mix changing in the coming decades? Have renewables made enough advances to properly compete with fossil fuels or is that still a long way off?
A8- Turkey has already consumed almost all fossile fuel firing thermal power plant capacity, and planned to consume in near future. Turkey’s energy mix is mostly based on imported fuel, imported coal, imported gas, which all created high current account deficit, and CAD should be lowered by all means. Turkey should invest more on renewables. Renewables will continue increasing their energy mix ratio, as long as the base-load is maintained with thermal and dam hydro power plants. The grid need to increase its reliability for more interruptible renewable energy integration.
Thank you very much for your valuable time allocated to us.
International Energy Investments Team
To hear from Mr. Direskeneli more, please join us at the 2nd Turkey Energy Investment Conference 2015 in Istanbul