Iraqi Kurdistan offers improving business environment; tensions with Baghdad remain – country risk report

Maplecroft    Country Risk Report for Iraq

Maplecroft’s Country Risk Report for Iraq focuses on the primary risks to oil and gas companies operating in Iraqi Kurdistan. The report includes in-depth analysis of current political dynamics, including tensions between Erbil and Baghdad, security concerns, legal and regulatory challenges, the human rights and labour rights situation and environmental issues.

Iraq is facing a year of political uncertainty and potential instability. In Iraqi Kurdistan, the relationship between the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic Party (KDP) is souring. Meanwhile, an increasingly hostile and intractable confrontation between Erbil and Baghdad over contested territory and Kurdish issuance of oil contracts remains a source of concern for investors. Tensions peaked in November 2012 when both the KRG and federal authorities sent thousands of troops to a disputed border in the Diyala governorate. A de-escalation of the military stand-off has yielded progress but political statements regarding the incident remain vitriolic.

Oil and gas companies have good reason to be interested in Iraqi Kurdistan. Long-term indications suggest that crude production from the north of the country will constitute a rapidly growing share of overall national output, rising from 6.6% in 2012 to 33% by 2020. However, considerable challenges remain, not least the inability of Erbil and Baghdad to agree on the terms of exploration contracts.

Turkey's shale gas hopes draw growing interest

TPAO's shale gas drilling area Sarıbuğday-1 in southeast Turkey

Orhan Coskun and Evrim Ergin     Reuters


Several firms eye exploration licences, official say
Southeastern region around Diyarbakir main prospect
Major reserves could reduce reliance on imported energy


ANKARA/ISTANBUL (Reuters) - Turkey is hoping to find shale gas reserves big enough to help reduce its energy import dependency and is in talks with foreign firms about widening exploration after encouraging early signs, industry officials said on Monday.

The government is hoping that major shale gas reserves lie in basins in its southeast, east and western Thrace regions and officials say several firms, including smaller players already looking for conventional oil and gas, are keen to explore.

With domestic gas consumption rising and its geographic location meaning it is also well-placed to supply international markets, major exploitable reserves could be a game changer for Turkey's economy and highly lucrative for whoever finds them.

"We are keen to exploit this method and we must make economic use of shale gas," Energy Minister Taner Yildiz told Reuters, saying it would be a priority for the near future.

Shell is drilling for shale gas in the region around the southeastern city of Diyarbakir, while Canadian firm TransAtlantic Petroleum is also active in the region.

Turkey holds its breath for shale gas and syngas

AA

Turkey’s anticipation to be freed of soaring import dependency due to rising energy consumption feels more realizable as shale gas reserve searches and synthetic gas production continue

New findings are spurring hopes in Turkey’s search for new energy resources, following the energy minister’s recent announcement that indications of possible shale gas resources had been found in the Central Anatolian provinces of Ankara, Konya and Kırşehir.

Both the rising domestic gas consumption forcing import dependency and Turkey’s geographic location linking it as a supplier to international markets suggest that the discovery of major reserves could be a great relief for the Turkish economy.

Turkey has been anticipating the normalization of world energy markets, which have recently seen significant price divergences. However, in the meantime it is also seeking to benefit from the reserve potentials in its southeastern, eastern and western regions, Energy Minister Taner Yıldız said during Turkey’s International Shale Oil and Gas Conference held in Ankara.

Shell has been drilling around the southeastern city of Diyarbakir for shale gas, but Turkey has also accelerated its operations in Central Anatolia.

Turkish-Greek economic ties expand

Capital.gr

The Turkish market has become a major export destination for crisis-stricken Greece, as Greek companies find it harder to sell in the domestic market due to worsening financial conditions of the average Greek household.

Greek exports to Turkey surged to $3.5 billion (2.6 billion euros) in 2012 from $1.1 billion in 2009, according to Turkstat data. During this period, the average year-on-year increase of Greek exports hovered around 50 percent, while Turkish exports remained flat at around $1.5 billion each year.

This eye-catching shift in trade relations left Turkey as a net importer from Greece, whereas in 2007, before the Greek debt crisis, Turkey had a positive trade balance with Greece of $1.7 billion.

Archontis Pantsios, a professor of economics at The American College of Thessaloniki, said that since the onset of the crisis in Greece, Turkey has become a more suitable market for Greek companies.

"They are looking to lower the costs and exporting to Turkey is an effective option for Greek companies," Pantsios told SETimes.

Turkey΄s vibrant domestic demand and large market is seen as another reason for the increase in Greek exports to Turkey.

Turkey-Israel gas pipeline deal ?

Turkish companies and western multinationals operating there are expressing an interest in purchasing gas from Israel’s Leviathan gas field, media outlets in both countries are reporting.

“The Turks are interested in buying Israeli gas, they refuse to buy Cypriot gas, but any pipeline from Israel to Turkey would run through Cyprus's exclusive economic zone,” Israel’s Haaretz reported.

An Israeli-Turkish undersea pipeline would be 600km long and cost an estimated $2 billion, the paper said.

Other reports said that, in addition to the Leviathan partners - Noble, the Delek Group and Ratio Oil Exploration - the Israeli Prime Minister's Office, Ministry of Foreign Affairs, and the Ministry of Energy and Water Resources have been informed about the contacts.

Turkish conglomerate Zorlu Group is said to be lobbying Israel to approve energy exports to Turkey.

Zorlu's reported plan is to lay an undersea pipeline from the Leviathan field 130km off Haifa to Turkey's south coast.

The conglomerate has interests in textiles, communications, energy and real estate, and is considered one of Turkey's biggest consumers of natural gas. In Israel, it owns a 25 per cent stake in Dorad Energy, which is developing a private power plant in Ashkelon.

Cyprus election contenders tap gas reserve potential

Southeastern Mediterranean Energy Map

Michele Kambas     Reuters


* Cyprus sitting on gas worth potentially 400 bln
* Presidential candidates tap political gains
* Cypriot gas could be extracted 2018-2019
* Turkey says move is illegal


Nicosia - Huge untapped gas deposits almost 20,000 feet below the surface of the Levantine Sea could be a life-changer for debt-crippled Cyprus and candidates in Sunday's presidential election are rushing to reap political gains.

Experts believe Cyprus, a novice in the energy sector, could be potentially sitting on hydrocarbons worth up to $400 billion. That would dwarf a 17.5 billion euro financial bailout under discussion with international lenders.

"Prima facie, its huge. Much bigger than anyone is talking about," said Michael Economides, an energy consultant based in Houston, Texas.

But this treasure is buried deep in the Mediterranean and is trapped in one of the most bitterly-contested regions of the world, with arch-rival Turkey openly branding Cyprus's efforts to tap it illegal.

Nabucco and TAP gas pipelines could both be built one day -TAP

Reuters

Both of the projects vying to pipe Azeri gas to the European Union can be built but not yet, a senior official from one of them said on Wednesday.


Second pipeline could take another five-to-10 years
Decision on winning project expected by mid-2013



The governments of Albania, Greece and Italy on Wednesday signed an agreement, confirming their support for the Trans Adriatic Pipeline (TAP), one of two projects in competition to reduce EU dependence on Russian energy.

"There will be 10 billion cubic metres of gas available from Shah Deniz phase II. In that context, there can't be two large-scale pipelines built at the same time," TAP External Affairs Director Michael Hoffmann told Reuters.

"But we can have two pipelines in a sequential situation. It will only be a matter of time before more gas comes on stream from Azerbaijan, though this may possibly take another five to 10 years."

TAP is proposing a route through Albania and Greece into Italy, while the rival Nabucco West project would ship gas along a different path from Turkey's western border into a hub in Austria from whence it could be distributed.

Heavily indebted nation Greece is particularly in need of the kind of investment an energy pipeline would bring and Greek Prime Minister Antonis Samaras attended Wednesday's signing ceremony in Athens.

Natural Gas to Cyprus

Michael J. Economides      Energy Tribune
 
The news of the Cyprus Public Natural Gas Agency, DEFA’s recent decision to include only LNG strategies and exclude CNG technologies from further negotiations for the interim delivery of natural gas to that country is shocking, illogical to the extreme, almost insulting to the intelligence of the people. It becomes even more frustrating that all is secret and it is impossible to see the rationale. But no matter what, it is totally flawed.

LNG is the obvious means of large trans-national gas transport, but for Cyprus it was a bad idea ten years ago, it was worse three years ago and it is disastrous today, just four years before the country is expected to bring on line its own plentiful supply. The situation is really very simple. The needs of Cyprus (100 million standard cubic feet per day) are not even remotely enough to justify interim LNG, stationary or floating. The only possibility for Cyprus interim solution has always been CNG; and if, for whatever reason, that is seen as unworkable, then staying with diesel, with all the associated environmental problems and EU fines is preferable, by far.

France's Total joins Cyprus energy rush

AFP

Cyprus on Wednesday signed an agreement with French energy major Total to conduct exploratory drilling for gas and oil in two blocks off its southern shore.

The deal comes as Cyprus aspires to become a regional energy hub with the prospect of oil as well as natural gas being tapped beneath the sea bed.

"With today's act the government has completed one of the most crucial aims in its energy policy, that of successfully conducting a second round of licensing," Commerce Minister Neoclis Sylikiotis told reporters after the signing ceremony.

Total signed a deal to exploit blocks 10 and 11 that are adjacent to a large natural gas find in block 12 and said it seeks to proceed in drilling for oil as well as gas reserves in the said blocks.

Turkey has protested strongly against Nicosia's energy search, branding it illegal and beginning its own exploratory drilling off the breakaway north of the island.

Ankara has warned that companies involved in the Cyprus process could be shut out of Turkey's energy investment.

Sylikiotis said that having countries such as France, America and Italy involved in the island's hydrocarbon exploration acted as a "political shield" against Turkish threats.

Cyprus has been divided since 1974, when Turkish troops invaded and occupied its northern third in response to an Athens-engineered coup in Nicosia aimed at union with Greece.

It is estimated that there could be around 60 trillion cubic feet of gas lying in the 13 blocks that make up Cyprus's 51,000 square kilometre exclusive economic zone.

Azerbaijan to purchase Turkish T-129 ATAK helicopters, total cost $3 billion

Turkey's native Attack Helicopter T-129 ATAK on training flight

Azerbaijan will purchase 60 T-129 ATAK helicopters manufactured by Turkey, the Sabah newspaper reported on Monday.

According to the report, Azerbaijan ordered T-129 ATAK helicopters from the Turkish aerospace company Türk Havacılık ve Uzay Sanayii (TAI), and mass production will begin in this year.

Purchase of 60 helicopters, specially manufactured for Azerbaijan, will cost $3 billion.

Besides Azerbaijan, UAE, Malaysia, Pakistan and Jordan showed an interest in buying helicopters.

Turkish-made ATAK combat helicopters are part of the state program aimed at ensuring the Turkish army with arms, equipment and outfit of own production. Currently, Turkey has achieved self-sufficiency in this sector at 50 percent.

ATAK helicopters can reach speeds of up to 300 kilometers per hour, to fly in any weather conditions and poor visibility.