Turkey taking risks with Arbil oil trade
2012-07-11 16:36:05
Energy-hungry Turkey, searching for new oil suppliers after dramatically cutting imports from Iran due to a Western embargo, has entered a rocky road in northern Iraq by starting to buy crude directly from the Arbil administration.
Following a strong purchase in April, Turkey sharply reduced Iranian oil imports last month before the start of the EU embargo that started on July 1. The country imported 110,000 barrels per day during June, from 250,000-280,000 bpd in early 2012. Despite a 20 percent cut in Iranian oil exports as a part of U.S. sanction exemption, Turkey still buys nearly a half of its oil needs from Iran, which evidently does not promise energy sustainability in the shadow of a growing Tehran-Washington rift due to the Islamic republic’s nuclear program.
Turkey’s first reaction to replace the Iranian oil was trying a chance with Libya and Saudi Arabia. However, it was not the only nation to apply to these suppliers.
However, the central Iraqi government, another leading supplier, has signaled no compromise in its policy to force foreign buyers into direct ties. Iraq has strongly opposed Turkey’s direct crude purchase from Arbil, declaring the move illegal. Baghdad has already threatened Western oil searchers with a ban from the country’s rich southern oil fields in case they continue direct trade and research activities with the Kurdistan Regional Government in the north. ExxonMobil has been eliminated from a tender for new oil fields in the south.
Turkish officials use careful wording while addressing the dispute between the local and central governments in Iraq, naming it a domestic problem of its neighbor. However, it cannot avoid taking risks to meet its growing energy needs. The official growth target, more than 4 percent for 2012 according to some Cabinet ministers, is widening the gap even further.
Turkish companies are increasingly dominating northern Iraqi oil, but this may not pledge sustainability. It may even bring the overall supply safety into question, in light of a lingering conflict over Iraq’s long-awaited hydrocarbon law.