Turkey urges US to lift obstacles on KRG oil sales

The Financial Times     By Daniel Dombey in Ankara and Anjli Raval in London

Turkey has called on the US to lift obstacles to the sale of oil by Iraq’s cash-strapped Kurds to help with their battle against the jihadis of the Islamic State of Iraq and the Levant (Isis).

The call, by a senior Turkish official, comes while the US carries out air strikes against Isis in support of the Kurdistan Regional Government, even as officials in Washington discourage international purchases of Kurdish oil for fear such a trade could further fragment the Iraqi state.

“This is urgent: Isis is now selling its oil, but the Kurds are not allowed to sell their oil,” the Turkish official told the Financial Times, referring to oilfields captured by the jihadist group in eastern Syria and around the northern Iraqi city of Mosul.

He claimed Isis was selling cut-price oil to the Syrian government – there are also allegations of widespread oil smuggling from the jihadist-controlled region, notably to Turkey itself – and compared those sales with the legal obstacles faced by KRG exports.

This week, Axeon, a US-based refiner said it would not proceed with a Kurdish buy because it was “controversial” – the latest in a series of rebuffs for tankers circling the globe with shipments of Kurdish oil.

With few buyers for its oil, one Kurdish official said the KRG was now working with Ankara on increasing storage capacity at the port of Ceyhan and elsewhere in Turkey, where the oil is piped before being loaded on to tankers, and was also looking at storing offshore.

How Guns And Oil Net ISIS $1 Million A Day

Fortune   Vivienne Walt  

Why extremist group ISIS is the world’s most frightening “startup.”

Every startup needs financing and a market to succeed. So, too, for the Islamist extremist group ISIS—or simply the Islamic State, as it calls itself—whose fighters stormed across the Syrian border into Iraq in June and seized the country’s second-biggest city, Mosul, before moving on to the outskirts of Baghdad. Now ISIS, an outgrowth of the U.S. military’s deadly Sunni foes in Iraq a decade ago, is the tycoon of the jihadi world. Having taken over oilfields in war-torn northeastern Syria last year and reportedly earned tens of millions selling antiquities, it landed a giant infusion of cash by seizing about $425 million from a Mosul bank.

But ISIS’s real upside lies in exploiting one precious commodity: oil. The group nabbed three more fields in Iraq, tapping into pipelines and looting oil storage facilities in its new territory. Then it filled trucks and sold crude for the cut-rate price of $26 a barrel to Iraqi traders, who resold it to Kurdish smugglers at a 100% markup. ISIS quickly developed its smugglers’ network—to which it now sells about 100 truckfuls of oil daily for around $9,000 each—netting nearly $1 million a day, according to truckers and officials who detailed the bonanza to the industry newsletter Iraq Oil Report. Not bad for a group with just about 10,000 fighters. Said one Kurdish intelligence officer: “This is a very profitable business.”

Gazprom Neft CEO Says Company Could Look East If Sanctions Hit

Reuters

Gazprom Neft , the oil arm of Russia's Gazprom, has not been hurt by Western sanctions over Russia's annexation of Crimea but will move away from dollars in its contracts, and redirect oil flows to Asia, if needed.

The company is the first in Russia's oil sector to say it could potentially move away from dollar-based contracts in response to Western sanctions and marks the planning going on in Russian industry to anticipate possible further measures.

But CEO Alexander Dyukov said Western banks were unlikely to stop cooperating with Gazprom Neft and that Western oil majors did not want geopolitical tension to affect their partnerships.

He told reporters the company would step up contacts with Asian lenders and raise money in Russia if borrowing costs rose further in reaction to the sanctions, visa bans and asset freezes which the West imposed on allies of President Vladimir Putin.

"As for sanctions, they have not affected the company's business in any way," Dyukov told reporters at a regularly scheduled briefing in Russia's second city of St. Petersburg, where Gazprom Neft is based.

He suggested Western companies did not want broader sanctions imposed on Russia, but Gazprom Neft would reduce its reliance on the dollar if the West shuts its doors.

Asian Buyers Say Prices, Demand To Trump Politics As Lure For U.S. LNG

Reuters

Asian natural gas buyers are counting on higher prices and growing demand to lure most North American gas shipments their way, even as U.S. lawmakers consider speeding up export approvals to cut Europe's dependence on Russia for the fuel.

Russia's seizure of Crimea from Ukraine has revived European worries about energy supply security. EU leaders are eager to end decades of reliance on Russian gas, and later on Wednesday will press the United States for clear commitments on a new source of supply.

U.S. lawmakers are already weighing changes to energy policy that would allow natural gas exports to any country that belongs to the World Trade Organization, and a key senator said on Tuesday that U.S. shale gas should be used to counter Russian influence in Europe.

Asian buyers, who have been counting on the fresh supply source to meet rising demand, said that Europe's option of increasing imports of liquefied natural gas (LNG) at the expense of Russian piped gas is a long-term, costly solution that may never happen.

"That is not going to happen overnight. You have to build up receiving terminals, which will take millions in investments and five or maybe ten years," chairman of Taiwan's CPC, Sheng-Chung Lin told Reuters at a gas conference in South Korea.

"Unless European countries show such determination, it won't happen," Lin said.

UK To Start Buying Gas From Russia Despite Threats Of Sanctions Over Crimea

The Huffington Post UK 

Britain is set to start buying gas directly from Russia this year despite EU politicians threatening to bring in further sanctions against Moscow amid tensions over the crisis in Ukraine.

Centrica, the UK's largest energy firm that owns British Gas, will start importing Russian gas directly from this October in a deal signed back in 2012, Reuters reported.

Centrica's plan is still on track, despite diplomatic tensions over Ukraine pushing EU politicians to consider energy sources that make them less reliant on Russia.

David Cameron recently warned that sanctions could hit Russian oligarchs like Chelsea football club owner Roman Abramovich and tensions have seen Russian spending at UK shops plummet.

UK domestic gas production is falling by around 7% annually. The UK has so far not imported gas directly from Russia, as Russian supplies come to Britain through Germany and other European pipelines.

In 2012, Britain produced nearly half of the 91 billion cubic meters of gas it used domestically, with 29% coming from Norway, around 7% from the Netherlands, 3% from Belgium and nearly 15% from Qatar.

Tory politicians have been bullish about how the UK could cope if further sanctions are brought against Moscow. 

Conservative MP Brooks Newmark, a member of parliament’s influential Treasury Select Committee, told HuffPostUK: "We can economically hurt Putin and his cronies as well, we can put a huge amount of economic pressure on them. They have enormous business interests in the UK and bank accounts here, too."

"Russia recognises that they are no longer one of the great global powers anymore so the only way they can reassert themselves domestically is by going into countries like Georgia and Ukraine."

Russia's state-run energy giant Gazprom sells between 11 billion and 12 billion cubic metres of gas to the UK, which fulfills around 15% of the country's total need, as well as providing around a third of Europe's demand for gas.

Source: http://www.huffingtonpost.co.uk/2014/03/25/uk-gas-russia-ukraine_n_5026247.html?utm_hp_ref=uk

East Mediterranean Eyes EU And Global LNG Markets For Gas Sales

Reuters

Europe's efforts to reduce its reliance on Russian energy supplies and booming demand for shipped gas are pushing ahead the development of the East Mediterranean's gas reserves, which have so far been marred by the region's instability.

Israel and Cyprus are both well placed to help diversify Europe's Russian-dominated market by pipeline, while sending liquefied natural gas (LNG) tankers to the world's best paying customers in Asia and Latin America.

Russia's seizure of Ukraine's Crimea region has shaken political relations between Russia and the European Union, and Brussels is stepping up efforts to find new suppliers.

"With recent events in Europe... and the aspiration of different countries to diversify their gas supply, that puts another spotlight on our massive resources and transforms our story into a global one," said Gideon Tadmor, CEO of Avner Oil , a leading explorer in the region, at a conference in Tel Aviv on Tuesday.

Almost one trillion cubic metres of recoverable natural gas has already been discovered in the eastern Mediterranean Levant Basin, enough to supply Europe with gas for over two years and worth between $370-$740 billion in current European or Asian market terms respectively.

Israel, which has so far found over 80 percent of all the gas, has said it would allow 40 percent of its reserves to be exported, while Cyprus will sell almost all of its gas abroad.

U.S. Lawmakers To Weigh Speeding Up LNG Exports To Help Europe, Ukraine

Reuters

U.S. lawmakers will hear testimony on Tuesday from those who favor loosening restrictions on liquefied natural gas exports so that abundant American supplies could help reduce Ukraine and Europe's dependence on Russian gas.

European worries about the security of energy supplies have grown since Russian forces seized control of the Crimean peninsula from Ukraine this month. Moscow has in years past cut gas supplies amid regional disputes.

Currently, the U.S. Department of Energy must give permission to export natural gas to all but a handful of countries with free trade agreements with the United States.

Opponents of unlimited gas exports have argued that shipping too much natural gas abroad could cause U.S. prices to rise, hampering the economy's ability to recover from the recent recession.

Hearings before the House and Senate energy committees come on the heels of the Energy Department's sixth approval of LNG exports from a U.S. plant in the past 10 months.

Turkey ‘earns $12 billion’ from Baku-Tbilisi-Ceyhan (BTC) Pipeline

AA

The Turkish Petroleum Corporation (TPAO) has earned $12 billion from the Baku-Tbilisi-Ceyhan (BTC) crude oil pipeline since 2005, when oil from Baku was first pumped, Turkish Minister of Energy Taner Yıldız has said.

During his speech in the southern province of Adana, Yıldız underlined the importance of the BTC pipeline for the region and trade volume created for the country.

He stated the TPAO has 6.5 percent of the shares in the BTC crude oil pipeline. British Petroleum (BP) and State Oil Company of the Azerbaijan Republic (SOCAR) hold the majority of the shares in the BTC pipeline, with 30 percent and 20 percent respectively. 

The pipeline has transported more than 1.8 billion barrels of crude oil to date.

Nearly 3 percent of the world’s oil trade is flowing along the BTC and Kirkuk-Yumurtalık crude oil pipelines through Turkey. The BTC pipeline has been transporting Azeri oil from the Caspian Sea to the Ceyhan Port of Turkey through the Georgian capital of Tblisi. The oil is then exported to European markets via the Mediterranean Sea.

Turkey on the frontline of Iraq's Kurdish oil row

AA

A move by Iraq’s Kurdish Regional Government to export 100,000 barrels of oil per day through Turkey is a tactical move brought about by U.S. pressure which could change after April 30 elections in Iraq, experts have told Anadolu Agency.

Baghdad has been opposed to the export of stored Kurdish oil from Turkey's south-eastern port of Ceyhan on the accusation that it violates Iraq’s constitution as it would bypass the country’s national oil company, SOMO.

Currently, 1.5 million barrels of oil are sitting in Ceyhan -- which has a total of storage capacity of 2.5 million -- and are awaiting Baghdad's approval to be exported. 

The KRG has been embroiled in a long-running row with the central government in Iraq over a proposed 17 percent share from oil revenues. The dispute has lead to political boycotts by Kurdish MPs over Iraq’s draft budget with the KRG refusing to withdraw demands, claiming it could never receive its fair share of oil wealth. 

Talks between Irbil and Baghdad have so far failed to find a solution. 

However, in a sudden move, following a phone call on Thursday between KRG President Masoud Barzani and U.S. Vice President Joe Biden, Kurdish authorities revealed that they would accept the export of 100,000 barrels of oil per day through SOMO from April 1 as a "gesture of goodwill" while negotiations for a permanent deal with Baghdad continued. 

Now Turkish, Kurdish and American experts have given AA their analysis on the dispute’s likely outcome.

Ali Semin, from the Istanbul-based think-tank BILGESAM, said the decision was a result of intensified mediation last week by Biden and U.S. ambassador in Baghdad, Stephen Beecroft.  

10 bids for Leviathan export tender to Turkey

Globes     Amiram Barkat

Bidders include Zorlu Group and a joint bid by Turcas Petrol AS and German electricity utility RWE.

More than ten bids were submitted in the tender by the partners in Leviathan for the export of natural gas to Turkey. The bids for the purchase of natural gas ranged from 7 billion cubic meters (BCM) a year to 10 BCM, amounts that could generate $22-31 billion revenue, assuming a 15-year gas supply contract at $6 per million British Thermal Units (mmBTU), the price of natural gas in Israel's domestic market.

Sources inform ''Globes'' that the bidders in the tender include Zorlu Group, which has stakes in independent power producers in Israel, and a joint bid by Turcas Petrol AS and German electricity utility RWE AG.

Noble Energy Inc. owns 39.66% of Leviathan, Delek Group Ltd. units Avner Oil and Gas LP and Delek Drilling LP each own 22.67% and Ratio Oil Exploration (1992) LP owns 15%.

In January, "Globes" reported that the partners in Leviathan had invited several dozen Turkish companies to bid in a gas supply contract from the gas field. The deal would include laying a pipeline to Turkey from Leviathan's proposed floating production, storage and offloading (FPSO) ship, which deliver gas to Israeli and regional customers. The price in the bids is the purchase price of the gas from the FPSO. In addition to this price, the bids will be evaluated on the basis of their commercial terms, including the take or pay condition and the capacity of the gas purchased.

Some of the bidders are willing to build the pipeline themselves, while others prefer working in partnership with the Leviathan partners. After reviewing the bids in the coming weeks, the partners will hold separate negotiations with the finalists for signing a gas purchase contract.

Source: http://www.globes.co.il/en/article-10-bids-for-leviathan-export-tender-to-turkey-1000926526