Turkey snubs Russia by pushing ahead with Iraq gas import pipeline

By bne IntelliNews December 9, 2014

David O'Byrne in Istanbul -


Turkey has signalled that it will press on with plans to construct a 20bn cubic metre a year (cm/y) pipeline to import Iraqi gas, just a week after agreeing to discuss the shock proposal from President Vladimir Putin to re-route Russia's giant planned South Stream gas pipeline through Turkish territory.

Turkey's state news agency Anatolia reported on December 8 that Turkey's state gas importer and transit pipeline operator Botas will next year start construction of a 40-inch pipeline capable of carrying in excess of 20bn cm/y of gas, running from Turkey's border with the Iraqi province of Kurdistan to Turkey's south eastern province of Mardin, where it will connect to Botas’ existing gas transit grid. Anatolia reported that a tender for the project would be opened early in 2015, with construction starting in the second half of the year, which is expected to be completed within 24 months.

The new gas line from Iraq has been in Botas’ development programme for several years, however the decision to push ahead with construction next year appears to be less linked to Ankara's long-term hopes of importing gas from the region and more to the nature of the Russian offer to host the 63bn cm/y South Stream. 

That offer was made on a visit to Ankara on December 1 by Putin, three weeks prior to which Russian gas exporter Gazprom had unilaterally cut the volume of gas it was supplying to Turkey's northwestern economic heartlands by as much as 50%.

As threats go it was hardly subtle – one commentator has said Putin likes to open talks by putting a knife on the table first – and would have been unlikely to influence Turkey's decision to open talks with Gazprom on the possible hosting of South Stream, as Ankara has made that same offer itself on several occasions in the past.

However, by signalling its commitment to push ahead with importing and transiting Iraqi gas, Ankara has sent an equally robust response, that it won't be fazed by the Russians' hardball actions, and will not be steamrollered into agreeing to host South Stream irrespective of other considerations.

Those other considerations include Turkey's ongoing efforts for EU accession, which could be harmed if it agrees to support a Russian project aimed at undermining the EU's long-hoped for southern gas corridor to carry Caspian and Middle Eastern gas to Europe; not to mention Ankara's hopes of transiting gas from the eastern Mediterranean reserves of Israel and Cyprus; and its close relations with Iraq's de-facto independent Kurdistan Region (KRG), with which it has developed a strong rapport and through which it hopes to facilitate an end to the festering conflict with Turkey's own fractious Kurdish minority.

Pushing ahead now with the planned 20bn cm/y gas pipeline will at worst offer Turkey a valuable back-up supply of gas should Moscow resort again to heavy-handed tactics. At best it could ensure sufficient competition for a share of the European market from new supplies entering via Turkey, to mean that Russia will no longer be able to use the threat of cutting supply as a means of maintaining high gas prices.

Whose gas is it?

As to whose gas the new Iraq line will source, that may take some time to clarify.

Asked by bne IntelliNews at a press conference on December 8 where the gas that the new Botas line will carry will come from, which company or companies will supply it, and when that supply is expected to begin, Turkish Energy Minister Taner Yildiz said only that Turkey is prepared to take whatever gas Iraq can supply.

Such reticence is perhaps not surprising. Having discussed possible gas imports from Iraq with Baghdad for several years, Ankara has for the past few years been forging close relations with the increasingly autonomous government of the KRG, much to Baghdad's annoyance.

However, the successful brokering in early December of a preliminary oil deal between Baghdad and the KRG has raised hopes that a final deal covering all the region's hydrocarbon reserves could be concluded next year, making it equally conceivable that gas from the region could be ready to flow to Turkey by 2017, when Botas’ new line is expected to be completed.

Certainly, there’s no shortage of possible suppliers. In mid-2013, then Turkish prime minister Tayyip Erdogan announced that Turkey had signed an agreement with ExxonMobil for the development of gasfields in the KRG region, which was followed by the signing of a similar deal between Turkey and the KRG later in the year. In addition, Anglo-Turkish developer Genel Energy has stated on several occasions that it could start exporting as much as 4bn cm/y from the Kurdistan region by 2017, rising to 20bn cm/y by 2020.

Few details of any of the options have been made public – least of all concerning the construction of a pipeline to carry the gas to the Iraq-Turkey border. However given the reportedly "easy" geology of the region, the question over supplies appears increasingly to be how much will be available and when, as opposed to whether it will be available.

Another question, therefore, is what Russia's reaction will be to the probable competition for its gas.

Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.