Turkey and Iraq Kurds close to energy deal

Πηγή: FT
By Daniel Dombey and Guy Chazan
Dec 12 2012

Turkey and the Kurdish regional government of Northern Iraq are in the final stages of talks on a giant Turkish investment in the Kurdish oil and gas sector that could transform the region.

The proposed deal, which would range from exploration to export, would seek to create a new “energy corridor” that by the end of the decade could send Turkey as much as 3m barrels a day of oil, 1m of which would be taken from other regions of Iraq, and 10bn cubic metres of natural gas a year.

However, Baghdad is opposed to the deal, which many analysts say could further the Kurdish region’s economic and political independence. US diplomats have already signalled concern the plan could speed the break up of Iraq.

“We don’t support oil exports from any part of Iraq without the appropriate approval of the Iraqi government,” said Victoria Nuland, State Department spokesman, this week.

But Kurdistan is already pushing ahead with plans for gas and oil pipelines that go directly to the Turkish border rather than passing through territory under Baghdad’s control.

“We believe politicians will eventually see that the financial benefits for the whole of Iraq outweigh any short-term political objections,” a senior Kurdish official said of the deal.

People close to the negotiations said the deal would set up a new company controlled by Turkey’s state-owned oil and gas companies, which would then acquire the rights for five exploration blocks in the Kurdish region. A person familiar with the talks said some of the blocks it is entering are those acquired by ExxonMobil last year.

Despite increased tensions with Baghdad, Ankara has long maintained it is committed to the territorial integrity of Iraq and fears the establishment of an independent Kurdish state could destabilise the largely Kurdish southeast of Turkey and create the prospect of a greater Kurdistan.

But Turkey is also seeking to diversify and increase its energy supply in order to reduce its dependence on Russia and Iran for its oil and gas.

Some 45bn barrels of oil are thought to lie below Iraq’s Kurdish region and the territory is now in a process of consolidation as big operators take the place of smaller players. Taner Yildiz, Turkey’s energy minister, has recently protested that it is unreasonable for Turkey to remain aloof from a region on its border while it looks as far as Venezuela to meet its energy needs. Genel Energy, a British Turkish energy company listed on the London Stock Exchange, already has extensive oil and gas interests in the region but Turkish state institutions do not.

In spite of the US objections, the Turkish and Kurdish authorities say the deal would do no harm to the unity of Iraq. “We support the territorial integrity of Iraq and the Iraq constitution and that is how we approach all of these issues, including any possible deals with the North,” said a Turkish official. But Baghdad insists that under the constitution, which says the country’s natural resources are the property of all the people of Iraq, its permission is needed for any cross-border pipeline.

In a sign of the sensitivity of the plans, Baghdad last week denied Mr Yildiz permission to land at an oil and gas conference in Irbil, the Kurdish capital, a dispute Ankara sought to play down. The Baghdad government last month pushed out TPAO, the Turkish Petroleum Corporation, from an oil exploration deal in the south of the country.

One person close to the discussions cautioned that because of the delicacy of the issue, there may even be no formal announcement of the establishment of the new vehicle by TPAO and Botas, the state gas company.

A final decision would be taken by Recep Tayyip Erdogan, Turkey’s prime minister, who has clashed with Nouri al-Maliki, prime minister of Iraq, over what he says is the Iraqi prime minister’s sectarian approach to governing and Turkey’s hosting of Tareq al-Hashemi, a fugitive Iraqi vice-president.