Oil from Northern Iraq set for export via Turkey, says minister
by Ali Ünal
Feb 24, 2014 - 12:00 am GMT+3
by Ali Ünal
Feb 24, 2014 12:00 am
Transportation of oil from Northern Iraq and natural gas from Cyprus and Israel to international market necessitates that these countries resolve their internal and external problems, says Energy Minister Yıldız
Negotiations between the Kurdistan Regional Government (KRG) and Iraqi government for the export of oil from Northern Iraq to world markets via Turkey have continued for months. The failure of the KRG and the central government to settle on a revenue-sharing deal concerning the proceeds of oil sales has caused significant tension and has been an impediment to the realization of the region's potential. There has been no official statement from either party regarding the final agreement but significant steps have been taken during the negotiation process. One key issue that was settled is the route of oil pipe lines. Speaking to Daily Sabah, Energy and Natural Resources Minister Taner Yıldız said Irbil, the capital of the KRG, and Baghdad agreed to export oil using Turkey as a passageway. Yıldız also made statements on the ongoing negotiations between Turkish and Greek Cypriots and efforts to normalize Turkish-Israeli relations. Negotiations between Irbil, Baghdad and Ankara continue in a bid to reach an agreement for transporting oil from Northern Iraq to world markets via Turkey. What are the latest developments regarding the negotiations?
Exporting Northern Iraq oil to world markets via Turkey is a significant step, but what's more important is that the welfare of all of Iraq will be improved through an agreement. The sharing of Iraq's income from its natural resources has not yet been settled due to the absence of a hydrocarbon law. Seventeen percent of total oil revenue will be delivered to Northern Iraq, but this is not an obstacle to manufacturing there. Drilled oil belongs to the whole of Iraq and the oil to be drilled in Iraqi regions will be gathered in a shared pool. Turkey aspires to expand that shared pool to be used for Iraq's service, and our endeavors should be evaluated in this regard. I can say that Baghdad and Irbil came to an agreement to pipe the oil to world markets using Turkey as a passageway.
Iraq's oil issue has been on both your and Turkish Prime Minister Recep Tayyip Erdogan's agendas. Why has this issue ranked so high in priority?
Piping Iraq's oil to world markets and a permanent settlement regarding profits does not mean just oil, energy and profit for Turkey; we believe that the agreement will contribute to regional stability. Turkey is not looking to control the region's oil and then leave it all in ruins. Iraq is Turkey's neighbor and our primary purpose is to ensure stability in the whole region and increase Iraqi welfare. Iraq's stability is linked with Turkey's stability, that's why this issue is on our agenda.
What happens if Turkey does not want to take a side during any possible conflict between Baghdad and Irbil?
If Turkey is not a side in this agreement and the pipeline is not placed through Turkey, it would be harmful to Iraqi society. When we consider Iraqi geography, we can assert that the capacity to use the Persian Gulf is limited and Syria is unstable due to the ongoing civil war. All of those reasons point to Turkey as the most suitable passageway for carrying the oil to world markets.
Has the issue of oil profits and banking systems been clarified?
According to the settlement between Turkey and Kurdistan Regional Government (KRG), oil profits will be shared through one of Turkey's state-owned banks. Turkey still has a firm stand on this subject, even though Baghdad clearly stated that it wanted the involvement of U.S. banks. There is no absolute settlement. Negotiations are continuing over the system for distributing oil revenue. While Baghdad demanded to use the State Organization for Marketing of Oil (SOMO) for oil trade, KRG asked to use the Kurdistan Oil Marketing Organization (KOMO). That issue was raised during visits we paid to Irbil and Baghdad in the past few months. An important step has been taken to build that system. I assume that the final agreement between both parties will be settled in the coming days.
Is there any other side that you are negotiating with on this issue, apart from Baghdad and Irbil?
We are holding efficient talks with U.S. authorities, for example the U.S. Deputy Secretary of Energy Daniel B. Poneman. During our talks, we have discussed details transparently and clearly. Turkey expressed its desire to see a settlement between both parties. Additionally, we are working on technical issues such as compressor stations to be established in the KRG region. What is important is reaching an agreement on transporting the oil, and we are very close to achieving that.
Do you have a comment on the reconciliation deal in Cyprus and the role of energy projects in the deal?
Political issues should be solved first in order to then bring energy projects to the table, that's why the reconciliation deal and the negotiations are of utmost importance. The current political landscape does not make it possible for Greek Cypriots to use the island's energy sources. A settlement between Turkish and Greek Cypriots will pave the way for an energy sector. Any possible gains from the natural resources of Cyprus should be equally distributed among the people residing on the two sides of the island. 'We must wait for the political waters to calm'
"Iraq's stability is linked with Turkey's stability, that's why this issue is on our agenda." It has been suggested that energy is a determining factor for the normalization of relations between Turkey and Israel. What is your opinion on this?
Like the Cyprus deal, the normalization of relations between Turkey and Israel will provide the necessary conditions for the establishment of energy projects between the two countries. For Israel, the most economical and feasible solution for transporting their natural gas, as well as natural gas that they will receive from Cyprus, to European markets would be via a pipeline through Turkey. We have not held talks with the authorities from the Israeli Ministry of Energy, but conversations with members of private sector institutions lead us to believe that negotiations are still continuing. As I said, we must wait for the political waters to calm before we see an outcome.