Turkey's pipe dreams

Arabian Business       Lionel Mok

Turkey has continued to make the headlines in the Middle East’s oil and gas industry over the last several months due to a number of factors which include the growing divide between the Kurdistan Regional Government (KRG) and the Federal Government of Iraq (FGI); and the recent signing of the Trans-Adriatic Pipeiline (TAP) and Trans-Anatolian Pipelines (TANAP).

Despite its unremarkable national oil production industry that produces, on average, 50,000 barrels per day (bpd) from reserves that total approximately 270 million barrels of oil, the country has made itself critical to the world’s energy market, while also managing to satisfy growing domestic consumption of over 700,000 bpd.

Turkey owes its gravitational pull in the energy market to its physical geography. As the only landmass standing between the Middle East and Europe, and also the Black and Mediterranean Seas, Turkey is well positioned to become an energy hub and a transit point.

The country is in proximity to 71.8% of the world’s proven gas reserves and 72.7% of the world’s proven oil reserves. It neighbors Iran, Iraq the recently discovered Eastern Mediterranean reserves near Lebanon; and it is less than 250 kilometers away from the Caspian Sea, home of the world’s largest oil discovery in the last thirty years.

By 2004, the Turkish straits of the Bosphorus and the Dardanalles, had the capacity to transit 3.4 million barrels of oil to European markets every day. At the same time, a terminal on Turkey’s Mediterranean coast at Ceyhan, facilitates oil exports from northern Iraq via a pipeline from Kirkuk and from Azerbaijan through the Baku-Tbilisi-Ceyhan pipeline. The Kirkuk-Ceyhan pipeline is Turkey’s largest, with a capacity of 1.65 million bpd.

The planned TANAP will include a natural gas pipeline system running from the Georgia-Turkey border to the Turkey-Greece border, while the TAP, will transport the same natural gas from Greece via Albania and the Adriatic Sea to Italy and further to markets throughout Western Europe.

Kurdish crude sales to rise as exports reach second Turkish port

Reuters          Julia Payne and Peg Mackey


* Taq Taq crude exports to reach about 60,000 bpd by end June
* Kurdistan to start deliveries to second terminal in Turkey
* Crude in steady stream to Northern Europe


Iraqi Kurdistan's crude oil sales to world markets, deemed illegal by Baghdad, are set to rise by nearly 50 percent next month as trucks start deliveries to a second export terminal in Turkey, industry sources in the region said on Wednesday.

Crude exports from the Taq Taq oilfield in the autonomous northern region to Turkey's Mersin port started at a trickle in early January and have risen to just over 40,000 barrels per day (bpd).

They are expected to hit around 60,000 bpd by the end of June as trucks unload at the neighbouring Dortyol terminal in southern Turkey.

Oil lies at the heart of a feud between the central government and Kurdistan. Baghdad says it alone has the right to control exports and sign deals, while the Kurds say their right to do so is enshrined in Iraq's federal constitution.

In retaliation, Iraq's State Oil Marketing Organisation (SOMO) sent letters warning customers not to touch any oil that had not been marketed by SOMO and the ministry intends to sue producers, namely Anglo-Turkish firm Genel Energy.

Turkey: The new energy hub of the Mediterranean ?

The Middle East Magazine

Israel's apparent rapprochement with Turkey following US President Barack Obama’s visit in March is being watched for its impact on several vital political fronts affecting the region, ranging from the intensifying conflict in Syria and fears about Iran’s nuclear ambitions to the possibility of a dramatic breakthrough in efforts to resume peace talks between Israel and the Palestinians. 

But one of its most immediate effects may be to heighten Turkey’s role as the undisputed hub for the transport of oil and gas from the Eastern Mediterranean to Europe and possibly on to Asia as well. Such a development could help to transform the economic prospects of highly indebted countries such as Jordan, Cyprus, Lebanon and the Palestinian Territories of the West Bank and Gaza, as well as Israel and Turkey, and bring with it dramatic new incentives for regional co-operation rather than conflict.

Equally important is the fact that Turkey is also embarking on a major programme to invest in renewable energy sources, including solar and hydropower, that could transform its energy exports in the future, to the benefit of consumers in Europe as well as at home. That, together with the fact that, at least in the medium-term, its gas exports to Europe, particularly to its southern and eastern countries, could help to reduce their reliance on both oil and coal – that are far more polluting than gas – could spell a brighter future for the younger generations in Europe, as well as in the Eastern Mediterranean.

Israeli Prime Minister Binyamin Netanyahu’s surprise phone call to Turkish Prime Minister Recip Erdogan on 22 March – in the wake of Obama’s visit – to apologise for the military action Israel took in boarding the Gaza flotilla ship Mavi Marmara in international waters three years ago, leaving nine Turkish citizens dead, is expected to be followed by other concrete moves to restore relations between Tel Aviv and Ankara. As well as compensation for the families of the victims, these are expected to include the exchange of ambassadors and the resumption of talks on exporting Israeli gas to Turkey, which, despite its key role in the transport of oil and gas, lacks its own hydrocarbon resources.

Kurdish oil trade with Turkey rising, more to come

REUTERS - Iraq    by Pec Mackey


Kurdistan is taking its first steps towards gaining independence from Baghdad in the sale of its oil and gas with a convoy of trucks taking the condensate liquid fuel bi-products of a remote gas field directly into Turkey.

At least 15 trucks a day are loading up with high quality condensate at Khor Mor's gas plant and then trundling down a bumpy road to start the two-day journey to Mersin on the Turkish Mediterranean.
In return, Turkey is trucking back small quantities of diesel fuel and kerosene to use in the autonomous region's power plants.

"It's a very simple but symbolic start to direct oil trade between the Kurdistan Regional Government (KRG) and Turkey - and there will be more to come," said an official familiar with the barter-type operation between private companies.

"Neither side is thinking about stopping."

But Baghdad wants them to. It believes Iraq's central government has the sole right to export oil and gas produced throughout Iraq and says deliveries by truck from Kurdistan across the border into Turkey are illegal.

Ankara is meanwhile encouraging the swap, which kicked off with five tankers in July. And Turkish Energy Minister Taner Yildiz says the volume could gradually build up to 200 trucks a day - roughly 40,000 barrels per day (bpd).

Turkey's pipeline plans could be transformational for oil explorers in Iraqi Kurdistan

Natasha Barr   PROACTIVEINVESTORS

Iraq is home to some of the world’s largest oil finds. But the exploration companies based in Kurdistan, in northern Iraq, have been unable to capitalise on their position due to the political tension between Erbil and Baghdad.

However, the impasse may be broken after Turkey, Kurdistan’s largest neighbour, revealed last week it had plans to build a pipeline that could transform the fortunes of such companies.

Credit Suisse analyst Thomas Adolff said: “Regarding Iraqi Kurdish exposed oil companies, we would argue that unlike in recent years, we can see the light at the end of the tunnel.”

Iraqi Kurdistan gained autonomy from the federal Iraqi republic in 2005 after the Kurds helped coalition forces fight off Sadam’s Iraqi forces.

However, the validity of oil and gas contracts issued by the Kurdistan Regional Government has long been disputed by Baghdad. And the resolution of this issue has been one of the main uncertainties for investors.