* Turkey relies to 70 pct on imports to meet energy demand
* Booming population need more electricity
* Domestic lignite to boost power production, reduce import
By John McGarrity
LONDON, Jan 8 Turkey is turning to its own coal,
worried about dependence on pricier gas from Iran and Russia,
after a deal with a UAE company which will boost its coal-fired
power capacity by two thirds.
Its biggest gas supplier is Russia's Gazprom,
which accounts for around half of imports, but it is long-term
supply from Iran that could pose the biggest concerns. Turkey
might not be able to continue to ignore further tightening of
international sanctions aimed at curtailing the Islamic
Republic's nuclear programme.
Gas imports have also been disrupted as a result of attacks
on Iranian and Azeri import pipelines by Kurdish separatists.
"In public, Turkey has tried to show it won't bow to U.S.
pressure, but even if can still buy Iranian gas, it's unlikely
to be able to increase imports from a country that is subject to
strict embargoes," said Alex Jackson, an analyst with political
risk consultants Menas Associates.
Iran supplies around 16 percent of Turkey's gas needs,
followed by 15 percent from Azerbaijan, according to
International Energy Agency (IEA) figures.
Ankara has signed a $12 billion deal with Abu Dhabi's TAQA
to mine lignite coal and build up to 8,000 megawatt (MW) of new
power plants by 2020.
"The TAQA deal is first and foremost motivated by the need
to refurbish and build new coal-fired power plants, but the move
to develop coal stems from a general concern that Turkey is
hugely dependent on others for its energy needs," said Andrew
Neff, a senior analyst with IHS Energy.
The European Association for Coal and Lignite (Euracoal)
says that Turkey imports over 70 percent of its primary energy
needs. Most of its 30 million tonnes annual hard-coal use is
supplied by Russia, Colombia, the United States and South
Africa, according to Euracoal.
Natural gas imports, mainly from Russia, Iran, and
Azerbaijan, meet around 45 percent of Turkey's demand for heat
and power, according to the IEA, a dependency which comes with
frequent price disputes with suppliers.
In another sign that Turkey's policy makers are keen to
reduce dependence on gas imports, the government said in
December that it would not take part in Russia's South Stream
gas pipeline project.
The pipeline aims to pump over 60 billion cubic metres,
almost twice Turkey's annual gas demand, via the Black Sea into
High gas prices that make gas-fired power generation less
attractive than coal, as well as concerns over gas import
dependency, have been shared by several European countries.
Consuming countries complain that Gazprom charges too much
for its gas and that its long-term supply contracts are too
inflexible, and the European Union opened an antitrust case
against Gazprom last year, sparking a political row with Moscow.
In Germany, cheap coal prices have led to a strong growth in
coal-fired power generation.
In Poland, which heavily relies on Russian gas supplies but
which is also a big user of the more polluting lignite coal
which Turkey mines, the government is eying potentially large
domestic supplies of unconventional natural gas sources, such as
Ukraine said last month that it secured a $3.6 billion loan
from China that will switch power plants from using imported
natural gas to gasified coal.
Despite Turkey's long-term aim of becoming less reliant on
imports, its demand for Russian gas in the short-term will
likely rise in order to meet booming demand, said IHS Energy's
A fast-growing population means that Turkey is likely to
overtake Britain as Europe's third-biggest electricity consumer
within a decade.
(Editing by Henning Gloystein and William Hardy)