Turkey, Iraq warm to new pipeline as supply surges

Today's Zaman

Turkey reiterated its willingness to build a new pipeline in cooperation with energy-rich Iraq for a second time in less than a week after Iraqi Prime Minister Nouri al-Maliki made statements aimed at breaking the ice with Ankara following months of hostile rhetoric.

 

The statements come at a time of new oil discoveries in Iraq with the existing pipeline infrastructure starting to fall short of meeting overseas demand, undermining the war-torn country's potential to boost energy exports incomes. Ankara and Baghdad have been at odds over a disagreement between the two to export northern Iraq's oil via Turkish markets. The latest developments, however, enhanced the chance for reconciliation between the two with the central government in Baghdad appearing to be less skeptical about Ankara's engagement with the autonomous Kurdistan region -- or Kurdistan Regional Government (KRG) -- to the north. Resource-hungry Turkey has heavily courted Iraqi Kurds regardless of the strife with Baghdad and continues doing so.

In an op-ed article published in Washington Post to mark the 10th year of US invasion in Iraq, Maliki said Baghdad “is committed to good relations with all our neighbors … offering the hand of friendship to Jordan, Turkey, Saudi Arabia and Kuwait.” Turkish energy minister Taner Yıldız said in Ankara on Wednesday that the government “is ready to cooperate in building a new pipeline that could serve as an alternative to an existing Baghdad-controlled Kirkuk-Yumurtalık pipeline to Turkey.” 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. Last month Yıldız said the Baghdad government has offered to build a pipeline from the Iraqi oil site of Basra to Ceyhan.


Yıldız asserted: "Iraq has the potential to boost current annual oil and gas sale revenues of $100 billion by three times in five to six years. Turkey will be happy to see conditions in Iraq improve.” Comprised of two different routes, Kirkuk-Yumurtalık remains the longest crude oil exports line in Iraq. “We are ready to transfer the crude from Basra to world markets when needed. This need will become more apparent when the capacity grows higher with the new oil facilities being built here,” Yıldız noted. The minister added that Turkey remained a key transfer route for Iraqi energy resources including oil and gas.

“Our energy trade with Iraq is covered by trade contracts that were signed earlier. A possible comprehensive deal on the government level will likely see extended cooperation in energy between us,” the minister added. There was no immediate response to Yıldız's comments from Baghdad on Wednesday regarding a planned Basra-Ceyhan pipeline.

Turkey places heavy importance on tightening its position as a key energy bridge for its major trade partner the EU, which it aspires to join. A crucial resource for energy-poor Europe, Ankara has already inked separate natural gas transfer deals with the regional major suppliers of Azerbaijan and Russia. Also making mention of a critical issue, northern Iraqi crude exports to Turkey, the minister said Ankara has an interest in increasing exports from this region as well. The KRG is already bypassing the federal pipeline network by trucking small quantities of crude oil over the Turkish border in exchange for refined oil products.

One of the key explorers in Iraq for Turkey, the Anglo-Turkish oil firm Genel Energy said on Wednesday it made a significant oil discovery in Iraq's Kurdish north. Genel is the largest producer in Iraq's north.

The firm is no newcomer to the region. In early January, the company started exporting Kurdistan crude oil directly to world markets through Turkey despite Baghdad's opposition. Bloomberg sources on Twitter quoted Genel CEO Tony Hayward as saying a new pipeline between Iraq's north and Turkey “would be completed this summer.” Hayward also told the news site the company is in talks with as many as four Turkish utilities to sell gas from its Miran field.

In an e-mail to Today's Zaman on Wednesday, London-based IHS energy analyst Sıddık Bakır said Genel is in the process of completing oil and gas infrastructure within the KRG-controlled region which includes the building of oil and gas pipelines. “There is discussion to use a gas pipeline, which needs to be built another 50 kilometers to get to the Turkish border, for Kurdish oil exports. Reportedly, Genel is considering turning it into an oil pipeline and transporting crude within Iraqi Kurdistan from its production fields (down from Taq Taq over Khurmala all the way up to Fish Khabur),” he said.

According to Bakır, it is not clear if Baghdad and Ankara would agree to connect the pipeline with the Turkish side of the Kirkuk-Ceyhan oil pipeline. “Turks could truck it further, or as many in the KRG hope, Turkey will build an additional stretch of pipeline on its side that is connected directly with Kurdish oil exports,” he noted.

Source:  http://www.todayszaman.com/news-312276-turkey-iraq-warm-to-new-pipeline-as-supply-surges.html