Turkey returns to energy chess game

Turkey made an important move in the energy chess game when it signed a Memorandum of Understanding (MoU) with Iran over the weekend.

Turkey returns to energy chess game
Turkey made an important move in the energy chess game when it signed a Memorandum of Understanding (MoU) with Iran over the weekend that will make both Russia and the US rethink their positions on gas policies in particular and on energy policy in general, said Cenk Pala, director general of strategic relations at state-owned Turkish Pipeline Company (BOTAŞ), affiliated with the Ministry of Energy and Natural Resources.

Energy Minister Hilmi Güler they said had negotiated on Turkey’s requests as Iran wanted to export gas to European countries at a press meeting on Sunday, adding that Iran and Turkey had signed a MoU on energy cooperation. Güler also said they were in talks with European countries in transferring Iranian gas as part of the Nabucco project.

Speaking to Today's Zaman, Pala stated that he was not fully familiar with the contents of the MoU at this stage. He said, however, that this MoU, if executed well enough, will make Russia to rethink its energy policy of making Europe fully dependent on its gas, while it will make the US accelerate the transportation of Iraqi gas via Turkey.

Thus the Turkish-Iranian MoU, which envisages both Turkmen and Iranian gas to be transported via Turkey, would also be welcomed in Europe, which has to renew its gas contracts with Russia before the end of 2010.

"Europe will now be relieved by the news that by 2010 it will have an alternative gas resource coming from the east, i.e., from Iran and Turkmenistan via Turkey," Pala said.

In Ankara on July 14, Iran's visiting Minister of Petroleum Seyyed Kazem Vaziri-Hamaneh and Turkish Energy and Natural Resources Minister Hilmi Güler signed the MoU on Iranian gas export to Europe via Turkey and Turkmen gas export to Europe via Iran. Both countries also agreed to develop part of the giant South Pars gas field in the Persian Gulf on a buyback basis, Tehran state-run radio reported Saturday.

"It was agreed that Turkey would develop three phases -- 22, 23 and 24 -- of South Pars and offer the gas produced to Iran on a buyback [basis]," state-run radio quoted Iranian Oil Minister Vaziri-Hamaneh as saying.Vaziri-Hamaneh said the two sides would sign an official contract within the next four to six months on development of the gas field, following the completion of feasibility studies by Turkey. The MoU has also given Iran a chance to make a move in the chess game by convincing Ankara to sell Iranian gas to Europe. Ankara, under pressure from Washington, has long been resisting Iranian demands to sell its gas to Europe via Turkey.

This weekend’s surprise deal reached between Turkey and Iran came soon after several agreements signed by Russian President Vladimir Putin with Central Asian energy-rich countries and lastly with Italian ENI, jeopardizing the Turkish goal of becoming an energy hub by bypassing the strategic and busy Bosporus and Dardanelles Straits. Both Turkish and European energy experts stated at the time that Putin’s move should be seen as a serious blow to both Turkish and European aspirations to reduce reliance on Russian gas.

Question marks over arbitration and gas prices

Turkish energy analysts are agreed that both Turkey and Iran have made an important move in this energy game. But there are questions that needed to be answered, such as whether Iran would reduce gas prices that it has been selling to Turkey in return for the MoU. Indeed, an international arbitration court has been examining Turkish complaints over the high gas prices that Iran has been charging.

Turkish energy analysts stated that in return for the Turkish-Iranian MoU, which came after long resistance by Turkey to marketing Iranian gas to Europe, Tehran should reduce its gas prices for Turkey, which currently vary depending on world oil prices.

Meanwhile it remains to be seen how the US would react to this Turkish move as Washington has been seeking to have its close ally Turkey follow suit with its containment policy of Iran, which has been rejecting calls by the international community to stop its uranium enrichment program.

According to Western analysts, Tehran has increasingly resorted to emerging nations to develop its oil and gas fields because of US sanctions. The sanctions aim at barring Iran from capital and technology transfers by major oil firms in industrialized nations.

While Turkish rapprochement with Iran will irritate its close ally the US, Pala stressed that this would also force Washington to quicken Iraqi gas transport via Turkey to Europe.

Russia’s Turkmen gas card may vanish

The Turkish-Iranian MoU came soon after Russian President Putin’s latest energy deals with some Central Asian countries.

The renewed risks of Russia’s increased dominance in the Caspian region first surfaced when Putin sealed an agreement with Bulgaria and Greece in March for building the Burgas-Alexandroupolis pipeline to transport Russian oil. Then came the news from Turkmenistan in early May that Putin and the heads of state of the regions’ main energy producers -- Turkmenistan’s President Gurbanguli Berdymukhamedov and Kazakhstan’s Nursultan Nazarbayev -- had agreed to build a pipeline along the Caspian Sea coast to ship Turkmen natural gas to Western markets via Kazakhstan and Russia.

A few days before that news came from Turkmenistan, Nazarbayev said at a meeting in Astana, the Kazakh capital, with Putin on May 10 that an additional 17 million tons of Kazakh oil might be used in the Burgas-Alexandroupolis project, the Russian Itar Tass news agency reported.

Putin also signed a letter of intent with Italian ENI in late June, a gas deal agreement attempting to replace the Nabucco project.

The Nabucco natural gas pipeline project, planned to transport natural gas from Turkey to Austria, via Bulgaria, Romania and Hungary, was intended to reduce Europe’s dependency on Russian gas. If construction of the 3,300-kilometer Nabucco pipeline starts in 2008, it could begin operating in 2011. The 4.6 billion euro ($6.14 billion) project could transport 25.5 to 31 billion cubic meters of Caspian gas to Europe annually by 2020. It is also planned to carry Iranian and Turkmen gas. Thus Turkey’s deal with Iran for the transportation of Turkmen gas via Iran and Turkey also has the potential to take the Turkmen gas card from Russia’s hands, stated a Turkish energy analyst.

Today's Zaman

Güncelleme Tarihi: 16 Temmuz 2007, 10:06