INTERVIEW-Turkey seeks Baghdad consent over N. Iraq oil deals, not blessing

by Reuters
Thursday, 30 January 2014 15:07 GMT

* Turkey to stand by consensus reached in Dec over Kurdish oil

* Around 220,000 bbls of oil stored in Ceyhan, low for exports yet

* Yildiz says harsh threats natural during intense talks

* Turkey keen for more gas from Iran if the price is right (Updates with more quotes, background, details)

By Humeyra Pamuk and Orhan Coskun

ANKARA, Jan 30 (Reuters) - Turkey will stand by a consensus reached in December between Ankara, Baghdad and Arbil to seek Baghdad's permission, but not its blessing, in exporting Iraqi Kurdistan's oil, Turkish Energy Minister Taner Yildiz told Reuters on Thursday.

Turkey signed a series of landmark deals with Iraqi Kurdistan in November to export the semi-autonomous region's hydrocarbon resources to world markets via pipelines through Turkey.

The move infuriated the central government in Baghdad, which claims sole authority to manage Iraqi oil. Iraqi officials have threatened Turkey with legal action if what they describe as "smuggled oil" is exported without Baghdad's approval.

Turkey has repeatedly said it will respect Baghdad's sensitivities and will help Arbil and Baghdad to find common ground before any exports can begin. But its efforts do not mean exports will only by shipped with Baghdad's permission.

"Before the Baghdad trip, we were asked if we could say we will not be exporting any oil without Baghdad's approval. We responded saying 'No, we can not," Yildiz said in an interview.

Yildiz travelled to meet Iraqi Deputy Prime Minister Hussain al-Shahristani in early December, en route to Arbil. His presence at the Arbil oil conference signalled Turkey's determination in its ambitions in Iraqi Kurdistan.

Yildiz said during his visit there were intense talks among the three parties to identify a wording that would suit them all. "And that's how that consensus text was established. It was not set up only by Turkey. We stand by that text."

The statement was published in Turkish, English and Arabic to avoid any mistakes that could derive from translation.

"We also would like to have the consent of the Central Government of Iraq for the commercial export of oil from the KRG to Turkey and start a trilateral cooperation scheme that will be beneficial to all," it read.

Since then, Arbil and Baghdad have wrestled over longstanding disputes such as the revenue share and where the funds would be deposited.

Throughout a stressful negotiation process, it is natural for temperamental statements to come out, Yildiz said. But he was still hopeful. "I hope our Iraqi brothers will find a common ground soon."

The Kurdistan Regional Government (KRG) had said it would start oil exports via its new oil pipeline through Turkey by the end of January but the volumes stored in the Turkish Mediterranean port of Ceyhan are still low.

Around 220,000 barrels of oil has been stored in tanks in Ceyhan so far, Yildiz said.

Three tanks with a capacity of 2.5 million barrels each have been allocated for Iraqi Kurdistan's oil, sources said.

Asked if Turkey will allow oil exports from Iraqi Kurdistan in case Baghdad and Arbil fail to agree on disputes, Yildiz replied: "We will evaluate when the time comes. I don't think we are there yet."


Back from an official visit to Iran, Yildiz said natural gas purchases from the Islamic Republic was a key topic in Prime Minister Tayyip Erdogan's visit, but added that the two sides were still far from agreeing on a price.

"We have discussed how we could increase our imports to 20 billion cubic metres and the price mechanism needed for that," Yildiz said, adding that Turkey has insisted on a reduction in the gas price.

Iran has responded by offering to sell more gas to energy-hungry Turkey. The offer is being considered.

"We have not found their price offer satisfactory at this stage. Obviously, without the price being agreed upon, we can't sign such a deal. Our teams will continue to work on this," Yildiz said.

Turkey has long maintained that Iranian gas prices are too high. Turkey's state-owned Petroleum Pipeline Corporation (BOTAS) applied to an international court of arbitration in 2012 over the gas price in a case that is still pending.

Turkey depends on imports for almost all of its natural gas needs, which are estimated to reach 52 billion cubic metres this year.

The $60 billion energy bill Turkey has to fund annually has been the biggest driver of its ballooning current account deficit and is seen as the main weakness of the economy.

"We have also discussed a barter system with Iran, through which we could swap various goods with energy imports," Yildiz added, without giving further details. (Editing by Nick Tattersall and Jason Neely)

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