Oil unites Kur­dis­tan and Turkey

Once at log­ger­heads, now best friends

The Kurdish Globe - - CULTURE - Go­ran Sabah Ghafour

A nat­u­ral gas pipe­line is be­ing built that will trans­port at least 10 bil­lion cu­bic me­ters of gas an­nu­ally to Turkey in re­turn for re­fined oil prod­ucts to Kur­dis­tan.

In a ma­jor move to bring Kur­dis­tan and Turkey closer, a nat­u­ral gas pipe­line is be­ing built, which will trans­port at least 10 bil­lion cu­bic me­ters of gas an­nu­ally. This is ap­prox­i­mately over fifth of Turkey’s cur­rent con­sump­tion. Turk­ish of­fi­cials have re­fused to pub­licly con­firm the project that threat­ens to ag­gra­vate a dis­pute be­tween Bagh­dad and the au­tonomous Kur­dis­tan re­gion over en­ergy re­sources.

US of­fi­cials are con­cerned that Turkey’s strained ties with Bagh­dad could have im­pli­ca­tions for the rest of the re­gion. Turkey is de­fy­ing Washington and Bagh­dad in de­vel­op­ing a broad en­ergy part­ner­ship with Iraqi Kurds as it pushes to se­cure af­ford­able oil and gas sup­plies to fuel its rapid eco­nomic growth.

Turkey is push­ing ahead with plans to ex­tend eco­nomic co­op­er­a­tion with Iraq’s Kur­dis­tan re­gion, brush­ing aside warn­ings from the United States that this ap­proach could lead to the dis­in­te­gra­tion of the Iraqi state.

Iraq’s Kur­dish re­gion has be­come so im­por­tant to Turkey, eco­nom­i­cally and po­lit­i­cally, that Ankara is will­ing to risk ten­sions with the US, its most im­por­tant ally, said Ce­lalet­tin Yavuz, an an­a­lyst at a think tank in the Turk­ish cap­i­tal.

Taner Yildiz, Turkey’s en­ergy min­is­ter an­nounced to the Turk­ish me­dia that oil im­ports from north­ern Iraq to Turkey by truck had re­sumed af­ter a pause of sev­eral weeks for tech­ni­cal rea­sons. He said Turkey was de­ter­mined to sell re­fined-oil prod­ucts to Iraqi Kur­dis­tan, the state-run Am­nadolu news agency re­ported. Oil ex­ports from north­ern Iraq to Turkey have an­gered the cen­tral-Iraqi government. It said the trade was il­le­gal, which Ankara de­nies.

Yildiz stressed that Turkey was also buy­ing oil from south­ern Iraq be­cause do­ing oth­er­wise would be “dis­crim­i­na­tion”.

The Kur­dish Re­gional Government (KRG) an­nounced last week its plans to press ahead with build­ing an oil-ex­port pipe­line to Turkey. “We want to have an oil pipe­line to our­selves,” said Ashti Hawrami, the Iraqi Kur­dish min­is­ter for nat­u­ral re­sources..

Crude from the Kur­dis­tan re­gion used to be shipped to world mar­kets through a Bagh­dad-con­trolled pipe­line to Turkey, but ex­ports via that chan­nel dried up in De­cem­ber, from a peak of around 200,000 bar­rels per day (bpd), due to a row with Bagh­dad over pay­ments.

Re­cep Tayyip Er­do­gan, the Turk­ish prime min­is­ter, said his coun­try was not obliged to wait for a new agree­ment be­tween the cen­tral Iraqi government and the KRG over oil ex­plo­ration and ex­port rights, even though Washington wanted Ankara to be cau­tious.

“Our eco­nomic re­la­tions are get­ting broader, de­spite ev­ery­thing, in­clud­ing Amer­ica,” Er­do­gan said last week, re­fer­ring to the KRG. Er­do­gan, who has been care­ful to de­velop close re­la­tions with the US, freely ac­knowl­edged ten­sions with Washington over the is­sue.

An­a­lysts say the move could also es­tab­lish the coun­try as a re­gional en­ergy hub, but risks ag­gra­vat­ing ten­sions in the pow­der keg re­gion and dam­ag­ing ties with the United States, its ma­jor ally.

Ankara had ini­tially re­fused to en­gage in of­fi­cial con­tacts with Iraqi Kurds, fear­ing that the es­tab­lish­ment of an in­de­pen­dent Kur­dish state there could em- bolden its own Kurds, some of whom have waged a nearly three­decade in­sur­gency.

But as Turkey’s econ­omy has boomed — it grew by more than 8.0 per­cent in 2010 and 2011 — and its thirst for en­ergy has grown, Prime Min­is­ter Re­cep Tayyip Er­do­gan has moved grad­u­ally to forge trade ties with Iraqi Kurds.

The bur­geon­ing en­ergy ties are rais­ing eye­brows in Washington, where there are con­cerns that they could tip the volatile coun­try to­wards dis­in­te­gra­tion and push an in­creas­ingly iso­lated Bagh­dad into Iran’s em­brace. “Eco­nomic success can help pull Iraq to­gether,” US Am­bas­sador to Turkey Fran­cis Ric­cia­r­done said ear­lier this month.

But “if Turkey and Iraq fail to op­ti­mize their eco­nomic re­la­tions ... there could be more vi­o­lent con­flict in Iraq and the forces of dis­in­te­gra­tion within Iraq could be em­bold­ened,” he warned. “... and that would not be good for Turkey, the United States, or any­body in the re­gion.”

Turkey has al­ready ruf­fled Washington’s feath­ers by con­tin­u­ing to im­port Ira­nian (oil and gas) de­spite US ef­forts to iso­late Tehran over its al­leged nu­clear weapons drive. But Ankara has re­mained defiant, sup­port­ing Iraqi Kur­dis­tan’s right to use part of its en­ergy re­sources as it sees fit.

Er­do­gan said the re­gional Kur­dish government “is free to use this right with which­ever coun­try it wants and we are their neigh­bor.”

An­a­lysts say en­ergy-hun­gry Turkey’s de­pen­dence on ex­pen- sive en­ergy im­ports from Iran and Rus­sia are push­ing it to find cheaper sources, and Kur­dis­tan ap­pears to be the best provider.

“Iraqi sources are the cheap­est and it is a way for Turkey to di­min­ish its en­ergy de­pen­dence,” Mete Goknel, former di­rec­tor of Turkey’s state-owned pipe­line com­pany Bo­tas, said to the Arab news on­line news ser­vice.

Ac­cord­ing to the US En­ergy In­for­ma­tion Ad­min­is­tra­tion, Turkey has been im­port­ing about half of its crude oil from Iran, although this is likely to fall given in­ter­na­tional sanc­tions on Tehran.

In 2011 Turkey was im­port­ing nearly 60 per­cent of its nat­u­ral gas from Iran, with a fifth coming from Rus­sia. “Turkey de­pends on Rus­sia and Iran on en­ergy and if both coun­tries close the tap, the Turk­ish econ­omy will tank,” said an en­ergy ex­pert who asked to re­main anony­mous.

This im­ported en­ergy has been re­spon­si­ble for a large part of Turkey’s trade deficit, which threat­ens to crimp ex­pan­sion. Goknel said Iraq would also ben­e­fit from Turkey be­com­ing a re­gional en­ergy hub. “It would be more ad­van­ta­geous for Iraq to ship its gas to west­ern mar­kets through Turkey ver­sus the more ex­pen­sive ship­ping lane, the strait of Hor­muz,” he said. A de­ci­sion is ex­pected within months on the route of a sep­a­rate pipe­line to ship nat­u­ral gas from Azer­bai­jan via Turkey to West­ern Europe. How­ever, Bagh­dad ap­pears in­tent on dash­ing Ankara’s de­signs to be­come a re­gional en­ergy hub, block­ing Turk­ish ef­forts to step up their pres­ence in Iraqi Kur­dis­tan.

In Novem­ber, Bagh­dad blocked Turk­ish na­tional en­ergy firm TPAO from bid­ding for an oil ex­plo­ration con­tract, a de­ci­sion which Er­do­gan said was not “smart busi­ness. Later on in De­cem­ber, Bagh­dad barred a plane car­ry­ing Turk­ish En­ergy Min­is­ter Taner Yildiz from land­ing in Er­bil as he was re­port­edly on his way to seal the much-spec­u­lated en­ergy deal.

A Bagh­dad-con­trolled oil pipe­line that goes to Turkey op­er­ates well be­low its ca­pac­ity to trans­port 70.9 mil­lion tons per year.

Sunni-ma­jor­ity Turkey is also at log­ger­heads with the Iraqi government of Shi­ite Prime Min­is­ter Nuri Al-Ma­liki over a num­ber of is­sues in­clud­ing Ankara’s re­fusal to ex­tra­dite fugi­tive Vice Pres­i­dent Tareq Al-Hashemi.

De­spite the dif­fi­cul­ties, Turk­ish trade with Iraq has grown rapidly, from $ 2.8 bil­lion in 2007 to $ 10.7 bil­lion last year.

Iraq is now Turkey’s num­ber two trade part­ner fol­low­ing Ger­many, with most of its trade be­ing from the Kur­dish re­gion. More than 1,000 Turk­ish com­pa­nies are cur­rently op­er­at­ing in north­ern Iraq, and they are op­ti­mistic Iraq could be­come Turkey’s top trade part­ner as soon as this year.

More sig­nif­i­cantly peace with the Kur­dish rebels in North­ern Kur­dis­tan would likely fur­ther in­crease the at­trac­tive­ness of Iraqi Kur­dish en­ergy re­sources for Turkey, say an­a­lysts.

At­ten­dants and ex­hibitors dis­cuss busi­ness dur­ing the Sec­ond Kur­dis­tan Iraq Oil & Gas Con­fer­ence in Er­bil, De­cem­ber 3, 2012.

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