Turkey eyes oil, gas deals with Iraqi Kurdistan

ANKARA Wed May 22, 2013 10:28am BST

Turkey's Energy Minister Taner Yildiz addresses the media in Ankara May 3, 2013. REUTERS/Umit Bektas

Turkey's Energy Minister Taner Yildiz addresses the media in Ankara May 3, 2013.

Credit: Reuters/Umit Bektas

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ANKARA (Reuters) - Turkey is looking to sign commercial contracts this year with Russian and U.S. companies operating in northern Iraq for joint oil and gas exploration, Turkey's Energy Minister Taner Yildiz told Reuters.

Turkish Prime Minister Tayyip Erdogan last week discussed U.S. concerns about Turkey's deepening energy ties with Iraqi Kurdistan during meetings in Washington with President Barack Obama.

Minutes before his departure for Washington, Erdogan announced that a Turkish company already had a contract in place with U.S. energy company Exxon Mobil but declined to provide details until after the visit.

Yildiz, who was in Erdogan's delegation, said the discussions with Obama and his team were very positive and fruitful.

"We are likely to be involved with Russian and American companies in northern Iraq for different projects like oil and gas exploration. And this year, state-owned and private companies could sign commercial contracts with northern Iraq," he said in an interview.

He declined to name companies.

Exxon was the first to sign up for exploration deals with the Kurdistan Regional Government (KRG). Others including Chevron, Total and Russia's Gazprom Neft have followed.

Iraqi companies operating in the northern region could also take part in such partnerships, which will involve three or four partners, Yildiz said.

Turkey has increasingly courted Iraqi Kurdistan as it seeks to boost involvement in oil and gas, a move that has upset the central government in Baghdad which says it alone has the authority to control oil exports from Iraq.

Baghdad views deals between oil companies and the KRG as illegal while leaders of the autonomous Kurdish region say their right to control oil resources is enshrined in Iraq's federal constitution, drawn up following the U.S.-led invasion of 2003.

STANDOFF

Washington, wary of the divisions between Baghdad and the Kurdish region, has urged passage of a long-delayed national oil law to resolve the stand-off, which has intensified since the last U.S. troops left in December 2011.

Yildiz said Turkey had made it clear during the U.S. visit that it was impossible for Ankara to remain indifferent to potential projects in Iraq and the two parties discussed what the ideal model for partnership should be in order to respect the Iraqi constitution.

"These partnerships could be done through state companies, semi-state companies and sometimes completely private ones," he said.

Until now, resource-hungry Turkey has been a customer and a transportation outlet for oil exports from the Kurdish region. With such partnerships, the Turks would play an active role in exploiting Iraqi Kurdistan's rich hydrocarbon resources.

Yildiz also said Turkey was keen to help Iraq build more pipelines as the OPEC member's oil production is increased, but that the existing pipeline carrying oil from Iraq's Kirkuk fields to Turkey's Mediterranean hub of Ceyhan should be fully utilised.

Turkey also discussed its oil purchases from Iran during Erdogan's U.S. trip, Yildiz said.

"The U.S. had no requests from us to further reduce the oil we buy from Iran," Yildiz said, adding Turkey would continue to buy Iranian oil at current levels.

Following last year's 40 percent cut, Turkey's sole refiner Tupras is now buying around 110,000 barrels per day (bpd) of Iranian oil as a European Union oil embargo against the Islamic Republic came into full force on July 1.

Turkey was twice granted a waiver on Iranian oil last year by the United States for 180 days after it made initial cuts.

Before the introduction of stricter U.S. and EU sanctions against Iran last year, imposed over Tehran's disputed nuclear programme, Tupras's purchases were averaging 180,000 bpd.

(Writing by Humeyra Pamuk; editing by Nick Tattersall and Jason Neely)

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