News Analysis: Turkey hopeful to be global energy distribution hub

After years of embargo, the final nuclear deal between Iran and world powers is expected to carry Turkey closer to its target to become global energy distribution hub, said energy experts here on Friday.

With a historic agreement on July 14, Iran agreed to limit its nuclear enrichment program and five permanent members of UN Security Council and Germany eased the embargo imposed on Iran since 2006.

Experts, in an interview with Xinhua, described the agreement as a big opportunity for Turkey and for the world in creating new trade partners in the field of energy.

With Iranian normalization process, Turkey will be closer to its target in being global energy distribution hub, experts agreed.

"Most probably, Iran will now involve in both several new pipelines projects with Turkey and also in Turkey's existing projects like Trans Anatolian Natural Gas Pipeline (TANAP) that will enable Tehran to deliver its energy resources to the rest of the world," Hanife Cetin, analyst at the Center for Energy Studies in TURKSAM told Xinhua.

Tugce Varol, energy and energy security analyst at 21st Century Turkey Institute also agreed that Iran would use Turkey as its main route to transmit its energy resources to European countries.

TANAP project initiated with Turkey, which is expected to be completed in 2018, will initially carry 18 billion cubic meters gas per year from Caspian Sea to Europe.

However the capacity will be 23 billion in 2023 and 31 billion cubic meters in 2026. Experts argued that the pipeline could easily carry the Iranian gas as well.

Iran has also been described by the experts as the last closed energy basin in the world.

Apart from few Russian and Chinese companies, there wasn't any other country which could invest in Iran during the embargo years.

However, as the embargo has been lifted in the country, a new world order in the energy field is expected to be shaped in the region.

World energy companies will soon surge into Iran for investment in Iranian lucrative and unexploited energy field.

"As the western companies pour into this new market, in five to ten years period the production will increase incrementally, so will do the energy export of Iran," remarked Varol.

These investments would affect the energy routes putting Turkey at an important position in delivering Iranian energy to the rest of the world, according to Varol.

Cetin also argued that Turkey, which already gained the trust of Western countries, is set to be a very attractive market for Iran in ameliorating Tehran's relation with the Western countries.

As the oil prices are expected to follow a downward trend after the deal due to the supply diversity, energy experts also expect Iran to sell its energy products to Turkey from very affordable price.

Iran is Turkey's second top gas provider after Russia, supplying 30 percent of Ankara's oil demand. Cheaper gas from Iran would mean both decrease in current account deficit and more gas supply for energy-hungry Turkey.

In 2014, Iran and Turkey achieved 13.7 billion dollar trade volume. The experts expect that this figure will be doubled in two years.

Due to the embargo imposed on Iran, Turkey had to face to Iraq for trade in energy fields.

However, Ankara has been having difficulties in payment that was resulted from the dispute between Iraqi government and Kurdish Regional Administration. Furthermore ISIS has been posing important security threat.

"Now, Iran with its big economy would appear as a safer market than Iraq, for Ankara," Cetin told.

But she also argued that it wouldn't be only Turkey which would try to optimize its interests in Iranian energy resources. The competition atmosphere in the region is expected to be highly developed and become fiercer than ever.

Now Iran would be new target of the giant Western energy companies in addition to the competition in Azerbaijani and Russian energy fields.

"Russia used to be a good friend of Iran, but soon it would become its biggest competitor, both targeting European markets," Varol highlighted.

She added that Russia is expected to try to hinder Iran to make a strong entrance into the European markets.

"Chinese companies were also quite active in Iran. They would also face with this fierce competition and would work hard in expanding their investment in Iran," Varol argued.

However Turkish companies have not yet developed such a strategy of investing in Iran and would have difficulties in finding position among these world energy giants, according to experts.

Turkey's oil companies like Turkish Petroleum (TP) or Petroleum Pipeline Corporation (Botas) has not been involving in active projects in neighbor country Iran.

In the meantime experts also expressed their concerns over Turkey losing its power in the region as Iran slowly appears as the new shining star of the region, not only in economic terms but also in diplomacy as well.

"Iran would no longer be the old Iran," said Varol.

The state would become more transparent and the country would amend its bureaucracy that will ease the trade, she pointed out.

"Turkey has already lost its power in the region in terms of politics. Even NATO could change its security parameters according to new regional order," she said. Endit