Turkey-Iran trade up 45% on year in Jan-Oct

By bne IntelliNews December 10, 2012

bne -

With Turkey struggling to reduce its reliance on Iranian energy even as international sanctions against the Persian state come into force, bilateral trade between the two countries grew 45% year on year in the first 10 months of 2012, Iran's Irna news agency reported on December 8.

Alongside several other major customers - mostly in Asia - Ankara on December 7 secured a new six-month exemption on US sanctions against buying Iranian crude oil due to its efforts to cut purchases. However, with troubles in its neighborhood seeing Turkey struggling to grow gas imports from elsewhere in the region, the country is at loggerheads with Washington over its controversial scheme that sees it swap gold for Iranian gas.

That trade - structured to try to avoid the sanctions - has helped boost bilateral trade to $20bn so far this year. Turkey has exported more than $9.3bn worth of goods to Iran since the start of January, reports Irna, while it imported around $10.5bn - mostly in oil and gas. Bilateral trade peaked at $16bn last year, a rapid acceleration from 2000 when just $1bn was recorded.

Iranian First Vice President Mohammad-Reza Rahimi recently announced that trade between Iran and Turkey has accelerated and will soon reach $30bn by 2015.

Turkey's developing economy is desperate for energy to fuel its expansion, but is struggling to diversify supplies, or even keep its current alternative flows up to speed. With disruption to supply already hit by the Arab Spring and events next door in Syria, oil and gas pipelines heading in from the east of Turkey have also been hit by a series of attacks by the country's own Kurdish rebels this year.

Meanwhile, Ankara has enraged Baghdad by attempting to strike deals with Iraqi Kurdistan, claimed to host volumes of reserves that figure among the globe's ten largest. The Iraqi capital is fighting the autonomous region's claims that it should be able to sell its energy independently.

That leaves Turkey more reliant on current suppliers. Despite recent spats over pricing, Turkey is reported to be looking to its largest supplier - Russia - to raise exports to enable it to reduce Iranian imports. Earlier this month, Turkish Deputy Prime Minister Ali Babacan confirmed that Iran is being paid in Turkish lira for the gas it sells to the country. That cash is then converted into gold before repatriation.

The likes of Turkey, China, India and South Korea saw their exemptions on sanctions against crude purchases from Iran extended on December 7. The sanctions aim to choke funding for Tehran's nuclear program by slashing demand for Iran's oil exports. The West suspects that Iran's nuclear programme is enriching uranium to levels that could be used in weapons. Tehran has said that the programme is for the generation of electricity and medical purposes.

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