RWE has signalled its strong interest in the Turkish energy market by entering talks with an unnamed Turkish energy company for the construction of new power plants in the country.

The German utility is to establish a local company, headquartered in Istanbul, and hopes to be able to take advantage of strong growth in energy demand and the government’s plans to privatize large sections of the country’s energy industry.

The news came as Turkey’s prime minister Recep Tayyip Erdogan backed RWE as the sixth partner for the Nabucco pipeline project, a key element of the EU’s plans to reduce its dependence on Russian natural gas supplies.

The EUR4.6 billion pipeline is designed to pass via Turkey and the Balkans to Austria. A decision on RWE’s partnership in the project is also due from the state-owned Turkish Pipeline Corporation (Botas).

Demand for energy in Turkey is rising at around five per cent annually and the government is planning to privatize state-owned energy entities in order to encourage investment. RWE says it is currently looking into various partnership and investment projects that could follow on from the privatization process.

“The Turkish economy is dynamic and offers great growth opportunities,” explained Juergen Grossmann, CEO of RWE AG. The company says that its expertise with lignite – an important domestic resource in Turkey – will be important, although it is also interested in renewable energy projects.

RWE has applied to be the seventh partner in the Nabucco project, which will connect Europe with large gas reserves in the Caspian, Middle East and Egypt. The current shareholders are Austria’s OMV, Hungarian Oil & Gas Company Plc (MOL), Transgaz, Bulgargaz Holding and BOTA_.

Gaz de France is also a candidate for partnership in Nabucco.