Turkey and Balkans boost energy ties

Stakeholders from across the region see mutual economic and political benefits.

By Menekse Tokyay for SES Türkiye in Istanbul -- 06/12/2012

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Turkey and many Balkan countries are planning to boost their energy ties in the immediate future through a series of joint initiatives.

  • Turkey Foreign Minister Ahmet Davutoglu (right) with his Bulgarian counterpart, Nikolay Mladenov, in Ankara. Turkey and Balkan countries including Bulgaria are deepening their connections in the energy sector. [AFP]

    Turkey Foreign Minister Ahmet Davutoglu (right) with his Bulgarian counterpart, Nikolay Mladenov, in Ankara. Turkey and Balkan countries including Bulgaria are deepening their connections in the energy sector. [AFP]

Neither Turkey nor Balkan nations are major energy producers, but their location between energy-rich Middle Eastern countries and consumer markets in western Europe give them significant geographic potential as a transit point.

The partners are also eager to pool resources to increase their own local self-sufficiency and innovation, especially in renewable energy. As a participant in several pipeline projects with its neighbours, Turkey can bring significant expertise and experience to joint projects with Balkan countries.

"In the Balkans, there's extremely high potential for energy co-operation," Turkish Deputy Minister of Energy Murat Mercan told SES Türkiye.

Projects to realise this potential are in the works, according to Mercan.

"We are currently preparing the basis for energy teams that will be composed of bureaucrats and private sector representatives," he said. "These teams will reveal opportunities for co-operation between Balkan countries and Turkey, and start implementing concrete projects in specific energy fields."

The Balkans's diverse energy sector has considerable growth potential for the future, especially in terms of production and transit, said Mustafa Karahan, chairman of the Istanbul-based Turkish Energy Traders Association, an industry group which advocates for the interests of energy companies.

"One of the most important points of strategic common interests in Southeastern Europe is energy investment, especially in electricity and natural gas," he told SES Türkiye.

Karahan said that the strategic location of the Balkans is a major added benefit for investors.

"Especially for Turkish investors, investing in the region may be a more flexible choice in order to reach to western markets as well as the eastern markets due to the location of Balkan countries, with their access to alternative markets," he said.

Turkey's first energy team this month is set to visit Bosnia and Herzegovina (BiH), which is rich in water resources and renewable energy potential. The initiative aims to build on the countries' existing energy ties, which were boosted by BiH Energy Minister Erdal Trhulj's August visit to Turkey.

"We chose [BiH] because there were many similarities between the two countries in terms of natural resources and capabilities," Mercan said. "But as a ministry, we're open to other requests from Balkan countries."

George Tabakov, chairman of the Sofia-based Bulgaria Economic Forum, told SES Türkiye that the regional environment is increasingly conducive to such efforts.

"All countries in the region need foreign direct investment in order to stimulate their economic growth. Doing business in all countries is becoming easier, especially in those countries that have recently joined the EU," he said. "Countries which are progressing in their way toward the EU [also] have a much more favorable business climate with clear rules being introduced."

Tabakov also pointed to rising consumption and the Balkans's geographic location as strong incentives for investment.

"For big businesses, the energy sector looks promising for co-operation because there is a need to connect the resources from the East with the consumption in the West, and because the energy needs of Turkey and the region increase each year and will continue to increase," he said.

Ankara and Sofia signed a declaration in March to accelerate the construction of a cross-border interconnector gas pipeline to increase Caspian gas deliveries to Bulgaria. The necessary infrastructure in Bulgaria will be completed by the end of 2013 and the commissioning of the interconnection will be finalized by March 2014, according to the Bulgarian energy ministry. Experts see the project as a key to Bulgaria’s energy diversification efforts.

Nevertheless, Tabakov listed poor transport infrastructure, the Balkans’s lack of interconnected energy systems, visa regimes and heavy red tape as challenges facing foreign investors.

Turkish and Bulgarian investors could co-operate on water management in addition to gas, he said.

"The joint construction of a dam over Tundja River close to the Bulgarian-Turkish border can be a promising co-operation area," Tabakov told SES Türkiye, adding that the project would allow easier use of the river's waters, reduce flooding in Thrace during springtime, help produce electricity, and attract tourists.

Experts also see investment potential in Montenegro, which for four years has been among the top three European countries in foreign direct investment per capita.

Petar Ivanovic, director of the Podgorica-based Montenegrin Investment Promotion Agency, told SES Türkiye his country's growing regional role makes it an ideal choice for businessmen.

"One of the reasons why the energy field [in Montenegro] interests Turkish investors is that we are currently working on an undersea cable between Italy and Montenegro that should allow us to export significant quantities of energy," he said. "Such projects are putting Montenegro into the centre of the regional energy market."

Ivanovic added: "Many international reports are confirming that we are on the good way, as Montenegro is moving forward in all ratings such as economic freedom, doing business, competitiveness, etc. And for investors, this is important sign -- to have faith and trust into direction country is going to."

The Turkish-Montenegrin Joint Economic Committee signed a protocol last April to increase mutual trade, especially in energy.


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