Turkey tip-toes toward politically delicate bid to tap Iraqi gas

By bne IntelliNews March 19, 2007

Nicholas Birch in Istanbul -

It's a move officials say is crucial to Turkey's US-backed dreams of becoming an energy corridor and the "fourth artery" for a Europe overly dependent on Russian oil and gas. But Ankara's new plans to build an Iraq-Turkey gas pipeline that would help funnel Iraqi gas into Europe risks stumbling on that oldest Turkish political bugbear: the Kurds.

Iraqi, Turkish and US officials met for a first round of discussions on the pipeline – expected to link Kirkuk in Northren Iraq to Yumurtalik on the Turkish coast - on the sidelines of an energy conference held in Istanbul on March 9.

On the same day, newswires reported that Royal Dutch/Shell had joined forces with a group of Turkish companies to bid for a licence to produce gas in northern Iraq.

Going to Turkey?

The news is unlikely to have any effect on the Turkey-Greece-Italy (TGI) gas pipeline, whose success, experts say, is guaranteed by the annual 10bn cubic metres (cm) of Azeri gas supplies that are expected to begin reaching Greece before the end of this year.

However, another planned gas pipeline called Nabucco, which would bring Caspian and Middle Eastern gas from Turkey to Central Europe and so help the EU in its drive to diversify from Russian gas, would have an enormous annual capacity of 30bn cm, a level which is casting doubt on the project's viability (to read more click here).

"That's a hell of a lot of gas", US Deputy Assistant Secretary of State for Energy Matt Bryza told bne at the energy conference in Istanbul. "Azerbaijan can do the first 8bn cm for the first phase, but if I'm going to put in a few billion dollars [of investment], I need to know there's more than just that coming in."

The obvious alternative would be Iran, but current UN sanctions rule cooperation with Tehran out. That leaves Iraq, with its estimated 3 trillion cm of gas.

Talking to Kurds

Turkey's moves on Iraq follow the Iraqi government's approval on February 24 of an oil and gas law aimed primarily at facilitating international investment. Not every aspect of the new law looks likely to go down well in Ankara, though, least of all the major role it gives to regional Iraqi administrations in awarding contracts to international bidders.

Turkey's energy minister insists, in public at least, that his counterpart in these negotiations is Baghdad. But with much of Iraq's gas in the territory claimed by the country's Kurds, he looks set to have to talk to the federal Kurdish authorities too.

That could be more difficult than it sounds. Afraid Iraqi federalism is giving its own ethnic Kurdish population ideas of nationhood and angered that Turkish Kurdish separatists continue to operate safely from northern Iraq, Ankara is no fan of Iraq's independence-minded Kurds.

Turkey's president, Ahmet Necdet Sezer, has refused to receive his Iraqi counterpart, the ethnic Kurdish Jalal Talabani, on Turkish soil. Less ideologically rigid, Turkey's government last month proposed talks with the Iraqi Kurdish authorities, but dropped the idea when Turkey's top general, playing to the nationalist home crowd, accused them of supporting terrorism.

"Don't expect any major breakthroughs on this before the [Turkish] presidential elections in May," warns Henri Barkey, a Turkey expert at LeHigh University in Pennsylvania.

More cynical observers believe that the strong US support for Turkish involvement in Iraqi gas is part of Washington's efforts to bring Ankara and the Iraqi Kurds together. The two have been engaged in a bitter war of words recently over the petrochemical-rich, multi-ethnic city of Kirkuk, which has a large Turkoman population. The Kurds say it is their capital; the Turks say it's a casus belli.

"Some think the prospect of a major investment in gas could stimulate better political ties," the State Department's Bryza says. "In my experience, you need to align the politics before you get the investments going."

Even so, Bryza says that energy could form the "cornerstone of a renewed and beautiful relationship between Turkey and the US," referring to the two countries' 50-year strategic relationship that lost its way somewhat when the Cold War ended.

"But if we don't get our work together in Iraq, that will overshadow everything, everything," he warns.

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