Turkey reportedly warns governments over Cyprus gas tender

By bne IntelliNews August 2, 2012

bne -

Turkey has stepped up its rhetoric over offshore oil and gas exploration around Cyprus, moving from warning the companies gearing up to participate in the second licensing round for the remaining blocks in the island's exclusive economic zone (EEZ) to threatening their home states - including Russia, China, France, the UK - at a governmental level, Turkish media claimed on July 31.

According to Turkish daily Aksam, the foreign ministry has sent a curt missive to 15 countries overall, warning: "We do not permit drilling in this controversial zone. If you do not want our ties to be deteriorated, withdraw the tender." However, the reported language used, and the fact that only Cypriot media appears to have picked up the report, casts doubt on its accuracy.

In May, Ankara issued a warning to 15 international energy companies that have responded to a second tender from the Republic of Cyprus, who hope to follow US-based Noble Energy which reported it has found major gas deposits last year. Turkey is the only country in the world to recognize the breakaway Turkish Republic of North Cyprus (TRNC) which controls the north of the island, and has responded by starting exploratory drilling in its offshore waters itself, claiming that the Cypriot EEZ is illegitimate.

Suitors for the tender, which include French oil major Total, Malaysia's Petronas, Korea's Kogas, Eni of Italy and Russia's Novatek, were warned three months ago that they would be barred from future energy projects in Turkey, but given that the Russia is the country's largest gas suppler, and Eni owns stakes in the country's largest gas and oil pipelines, it is viewed as having little real leverage. Therefore, according to the report, Turkey is turning its sights on the governments behind the companies.

Potential energy bonanzas are almost guaranteed to stir up regional disagreement, and the situation around Cyprus is sticking closely to that rule. Turkish warships have already accompanied its drilling ships earlier this year to the island's waters in a show of muscle, now - according to the latest report - it is using diplomatic channels to warn against "the creation of undesired tension."

Turkey argues that Cyprus should not be allowed to enjoy the benefits of its natural resources without the Turkish Cypriots also sharing in the revenue. It also claims that part of Cyprus' EEZ violates Turkey's own continental shelf. Being one of the few countries not to sign the UN Convention on the Law of the Sea, Turkey refuses to acknowledge the islands' right to an EEZ.

Turkish foreign ministry spokesman Selcuk Unal was quoted in the report saying the blocks in Cyprus' EEZ west of the island overlap with Turkey's own continental shelf and that "Turkey will not tolerate any action in these fields." He also argued that a big part of Cypriot EEZ south of the island overlaps with areas "licenced" to the Turkish National Oil and Gas Company (TPAO) in an agreement between Turkey and the TRNC. "The continuation of further activities by international oil companies in these fields might constitute the reason for the creation of undesired tension ... We call the relevant countries and oil companies to act with common sense and withdraw from the tender."

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