New pipeline will weaken Turkish-Israeli relationship - ASIA TIMES

JANUARY 12, 2019 12:35 AM (UTC+8)

Joseph Dana

The relationship between Turkey and Israel has never been an easy one to understand. Since formal relations crystalized in 1949, with Turkey becoming one of the first Muslim-majority countries to recognize Israel, both countries have found themselves at arm’s length with the rest of the Middle East.

By the time Israel sent medics to assist victims of Turkey’s tragic earthquake in 1999, the two countries were sharing military technology and bilateral trade was booming. The relationship then took a sour turn, at least rhetorically. A war of words between Turkish President Recep Tayyip Erdogan and Israeli Prime Minister Benjamin Netanyahu reached a fever pitch over the last decade and seemingly threatened the foundations of this unique partnership.

Many observers, however, believed the alliance was never really at risk, due to the sheer amount of trade that moves between the two countries.

But now, all that has changed. The discovery of massive natural gas fields off Israel’s northern coast more than a decade ago and subsequent attempts to export this gas to Europe have highlighted the true fault lines in the Turkish-Israeli alliance. Recent events reveal that a fundamental shift in the alliance is undeniably underway.

Turkey backs Iraq on oil after Kurdish vote - OIL & GAS JOURNAL

HOUSTON, Sept. 28, 2017

The government of Turkey said it will deal exclusively with the Iraqi government on oil exports after voters in the semiautonomous Kurdistan Region of Iraq supported independence in a controversial referendum.

Assurance from Turkish Prime Minister Binali Yildirim of support for Baghdad followed threats before the vote to close the pipeline that carries crude oil from Iraqi Kurdistan across Turkey to Ceyhan on the Mediterranean.

About 72% of eligible voters participated in the Sept. 25 referendum, which supported negotiations leading to separation from Iraq by nearly 93%.

Yildirim told Iraqi Prime Minister Haidar al-Abadi in a Sept. 28 telephone conversation that Turkey would deal only with Iraq on exports and that Iraq had “support of his country for all decisions,” according to press reports.

Turkey, Kurds in Duel Over Energy - NATURAL GAS EUROPE

February 19th, 2016

The intensification of ground warfare in Syria, internal strife in Turkey and the rhetoric of combat throughout the region are jeopardising prospects for both a gas pipeline from northern Iraq to Turkey and independence for the Iraqi Kurds.

On February 18, Kurdish separatists in Turkey warned against attempts to build a gas pipeline from Iraqi Kurdistan to Turkey, saying this would only stand to benefit Turkey’s ruling Justice Party, known by its Turkish initials as the AKP.

The statement from the Group of Communities in Kurdistan (KCK), an offshoot of the banned Kurdistan Workers’ Party (PKK) which is leading the revived war against Turkish rule in Kurdish areas of southeastern Turkey, came at a critical juncture. The day before, at least 28 people were killed in a car bomb attack on buses carrying soldiers to a military barracks in Ankara while a second attack, in the southern district of Lice on February 18 killed a further six members of the security forces.

Iraq's Kurds to Start Natural Gas Exports to Turkey in 2019-2020 | Bloomberg

Nayla Razzouk, January 15, 2016

• Gas exports to be doubled later, cost of link not finalized 
• Kurdish region holds 3 percent of world's total gas reserves 

Iraq’s semi-autonomous Kurdish region plans to start exporting 10 billion cubic meters a year of natural gas to Turkey by 2019-2020, according to an official at the Kurdistan Regional Government’s Ministry of Natural Resources.

The KRG will double gas exports to 20 billion cubic meters a year by the early 2020s, the official said in an e-mailed statement on Friday. He was clarifying remarks made on Thursday by Bewar Al-Khinsi, economic security adviser at the KRG’s Kurdistan Protection Agency, who had said gas exports will start by the end of 2016.

Cash-Strapped Iraqi Kurds to Start Gas Exports to Turkey in 2016 | Bloomberg

Khalid Al Ansary Bruce Stanley, January 13, 2016

• Pipeline to start shipping natural gas to Turkey by year end
• Kurdish gas to give Turkey alternative to imports from Russia

Iraq’s Kurds will start building their first natural gas pipeline next month to export the fuel to Turkey, a project that would bring the self-governed region closer to economic independence.

The link will transport gas from the Khor Mor and Chamchamal fields in northern Iraq’s Kurdish enclave, first to Turkey and later to Europe, Bewar Al-Khinsi, an economic adviser to the Kurdistan Regional Government, said in a phone interview. The KRG will begin shipping 10 billion cubic meters a year by the end of 2016 and double the volume to 20 billion by 2020, he said.

“The pipeline will be a source of revenue for the KRG and a step to help Turkey overcome a gas crisis that may arise” as a result of Turkey’s soured relations with Russia, an important gas supplier to the Turks, he said.

The KRG is struggling to pay its bills, including money owed to foreign energy companies including DNO ASA and Genel Energy Plc. A 35 percent collapse last year in the price of Brent crude is adding to strain on KRG finances at a time when the regional government must also pay the cost of fighting against Islamic State militants that control parts of northern Iraq. The country’s Kurds have long chafed against control by Arab-led governments in Baghdad, and gas exports would enhance their financial self-sufficiency.

Kurdish Reserves

The Kurdish region could hold as much as 200 trillion cubic feet of natural gas reserves, or about 3 percent of the world’s total deposits, according to the website of the KRG Ministry of Natural Resources. It also holds 45 billion barrels of crude oil reserves -- equivalent to almost a third of the deposits in the rest of Iraq, according to BP Plc data. Turkey offers the sole route to market the expanding Kurdish oil industry.

Turkey will help pay for the 831-kilometer network, which will run parallel to an existing oil pipeline, and Ankara-based Botas Boru Hatlari Ile Petrol Tasima AS will build it, Al-Khinsi said. The 181-kilometer section inside Kurdish territory will cost an estimated $750 million, he said. The project is the result of an agreement that the KRG and Turkey reached in 2013 to build two pipelines, one for oil and another for gas.

Dana Gas PJSC, a United Arab Emirates-based energy company operating in Kurdish Iraq, holds a 40 percent stake in both the Khor Mor and Chamchamal fields through its Pearl Petroleum Co. venture, according to Dana Gas’s website. All gas produced in the Kurdish region is currently sold locally, and the company wants eventually to sell fuel to Turkey and Europe, Dana Gas Chief Executive Officer Patrick Allman-Ward said Tuesday in Abu Dhabi.

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Will Turkey get rid of energy dependence? | TREND

12 JANUARY 2016, Baku, Azerbaijan, By Rufiz Hafizoglu, TREND

Turkey began to actively work in order to get rid of energy dependence and diversify natural gas sources since the middle of last year. The deterioration of relations with Russia has pushed Ankara to actively seek alternatives to Russian gas as well.

One such alternative, according to experts, could be natural gas from Iraq (Kurdish autonomy), which will start to be delivered from 2018.

But it is unlikely that the Kurdish gas, if Ankara starts to receive it, will become an alternative to the Russian gas.

Ankara intends to deliver gas from Iraq in the amount of 10 billion cubic meters, while since 2020, the volumes of supplies will have to increase to 20 billion cubic meters.

A tender will be held Feb. 9, 2016 in Ankara for constructing a new gas pipeline between Turkey and Kurdish Regional Government (KRG). Both local and foreign companies are allowed to participate in the tender. The pipeline’s length will be 181.5 kilometers.

KRG and Ankara signed a contract for 50 years in 2013, to supply natural gas to Turkey. But for the investing in any project political stability is needed - something that is currently absent in Southern Turkey.

Given this, it is unlikely that foreign companies will participate in the tender for construction of a new gas pipeline, however, it doesn't mean that the project won't be realized. Most probably, only local companies will participate in the tender.

Meanwhile, according to Russian gas giant “Gazprom”, there are two contracts between it and Turkish Botas – one is for the supply of up to eight billion cubic meters of gas through the Trans-Balkan route, the second via the “Blue Stream” - up to 12 billion cubic meters. The validity of the first contract is through 2022, the second - at least until 2028.

In addition, up to four billion cubic meters of Russian gas through the “Blue Stream” are purchased by private traders (as part of the liberalization, a part of volumes has been re-registered on them). These agreements were signed for 20 years.

Also, a number of traders concluded long-term contracts with “Gazprom Export” to import a total of six billion cubic meters of gas until 2042 (instead of the first contract for the supply of Russian gas to Turkey, which expired in 2012).

Traditional level of volumes subject to the “take or pay” rule is 80 percent of the contracted volumes. Thus, at least until 2022, Turkey is obliged to buy 24 billion cubic meters of Russian gas and 17.6 billion cubic meters until 2028.

However, according to Botas, Russia is committed to annually supply gas to the country amounting to 20 billion cubic meters. The first contract to supply Turkey with 16 billion cubic meters of Russian gas was signed in 1997, and it expires in late 2025. The second contract, for the supply of four billion cubic meters of gas, was signed in 1998 and expires in 2021.

In 2014, Turkey was the second largest importer of Russian gas after Germany – Ankara purchased 27.3 billion cubic meters of gas from Gazprom.

Turkey consumed 52 billion cubic meters (bcm) of gas in 2015, according to the Office of Energy Market Regulation (OEMR), and the annual increase in gas consumption is five percent in Turkey.

That is, no matter how Ankara tries to get rid of energy dependence, due to increased consumption of natural gas in the country, it is unlikely to be succeed. The maximum that Ankara will be able to achieve - is to diversify sources of natural gas.

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