Turkey's Energy Profile and Investment Potential

Turkey, ranking as the fifth largest electricity consumer in Europe, has historically relied heavily on foreign energy sources. However, significant strides have been made with a staggering $70 billion invested in renewable energy between 2002 and 2023, resulting in 80 percent of electricity production being sourced domestically.

Despite notable discoveries in domestic energy resources such as oil and natural gas, Turkey remains heavily reliant on imports from foreign nations. As the fourth largest natural gas consumer in Europe, Turkey imports 90 percent of its natural gas, with Russia emerging as the primary supplier.

Over the past six years alone, Turkey has imported over $100 billion worth of natural gas from Russia. Between 2018 and 2023, the country's total energy imports amounted to $324 billion, highlighting the ongoing challenge of energy dependency on foreign nations (Graph 1 and Table 1).

Turkey's primary natural gas supplier is Russia. Between 2018 and 2023, Turkey generated $66.3 billion in revenue through tourism and exports to Russia. However, it imported goods and services worth $190.4 billion in return. Similarly, many European countries share a natural gas dependency on Russia akin to Turkey's situation. Despite the Ukrainian War, these European nations collectively import an average of $150 billion worth of natural gas annually from Russia.

Turkey faces a comparable situation in its oil imports. With an average annual expenditure of $20 billion on oil imports, Turkey sources oil from countries including Russia, Iran, Israel, and Qatar.

Turkey’s investment in domestic energy

Owing to limited domestic resources, Turkey has prioritised significant investments in sectors such as renewable energy and electric vehicles. The strong public support for initiatives like TOGG (Turkey's Automobile Joint Venture Group) largely stems from the nation's energy dependency on foreign countries.

Given the potential within Turkey's energy sector, foreign investors are increasingly directing their investments towards this field. Out of the $262 billion in foreign direct investment attracted by Turkey between 2002 and 2023, approximately $30 billion was allocated to the energy sector. Major investors include Western countries such as Germany, Azerbaijan, the USA, and the UK.

Over the coming years, there is a significant expectation for expansion within Turkey's energy sector, aligning closely with the nation's economic growth trajectory. Projections suggest that Turkey's national income will soar to $1.6 trillion, experiencing a remarkable 20 percent growth in dollar terms between 2024 and 2028. Correspondingly, the energy needs of Turkey are forecasted to escalate by more than 20 percent during this period, reflecting the burgeoning demands of a rapidly evolving economy.

Promising opportunities in Turkey

It is anticipated that one of the sectors poised to reflect Turkey's economic growth most significantly is investment funds. With the country's escalating energy needs, burgeoning profits, and untapped potential, both foreign investors and the domestic public are presented with promising investment opportunities in Turkey.

Forecasts indicate that Turkey is expected to attract a substantial $18 billion in foreign investment in 2024 alone, with approximately $2 billion of this earmarked for the energy sector. This underscores the growing recognition of Turkey as an attractive investment destination, particularly within the dynamic and evolving energy industry.

As Turkey continues to pursue sustainable economic development and address its expanding energy demands, investment in the energy sector is poised to play a pivotal role in driving growth and prosperity in the years ahead.