Publication: Eurasia Daily Monitor Volume: 5 Issue: 9

Visiting Madrid on January 14, Turkish Prime Minister Recep Tayyip Erdogan stated that Ankara would proceed with fresh gas deals with neighboring Iran, although Tehran had once again halted gas exports to Ankara earlier this month.

However, Turkish energy analysts told Jamestown that Turkey has lately been vigorously exploring Iraqi and Turkmen gas options as part of fresh efforts to diversify its energy supply routes.

In addition, Ankara has recently started using its good offices to resolve a sovereignty dispute in the Caspian Sea between Azerbaijan and Turkmenistan, said the same sources.

If Turkish efforts yield results, Turkmenistan may agree to pump some of its gas through the Shah Deniz pipeline to reach to Turkey, making the long-awaited, U.S.-backed Trans-Caspian energy corridor a reality, said a Turkish energy analyst.

Turkish Prime Minister Erdogan told the press in Madrid that Ankara would not cut its relations with Iran despite UN sanctions over its nuclear program.

When reminded that the United States and Israel have been against Turkey’s energy rapprochement with Iran, Erdogan said, “Will the U.S. and Israel meet my natural gas needs? No. Under these conditions I will find ways of solving my own problem” (Milliyet, January 15).

Under a deal signed with Tehran in 1996 – and which became effective in December 2001– Iran is Turkey’s second-largest natural gas supplier after Russia.

Last July, Iran and Turkey signed a memorandum of understanding that envisages a $3.5 billion Turkish investment in Iran’s South Pars gas field on a controversial buy-back basis.

However, Iran has not yet resumed pumping gas to Turkey. Tehran had said it halted the deliveries due to the unusually severe weather conditions in Iran and due to a cut in imports from Turkmenistan.

The disruption of the gas flow has had a domino effect, prompting Turkey to stop the flow of Azerbaijan’s Shah Deniz gas to Greece in order to allocate more gas for domestic consumption. However, on January 9 the Russian Gazprom monopoly increased its gas supplies to Turkey and Greece at the two countries’ request.

Turkey has also bought an additional 80 million cubic meters of liquefied natural gas (LNG) from Algeria to meet its urgent domestic demand.

Iran turned off its gas supplies to Turkey on January 8, while both Turkish President Abdullah Gul and Turkish Energy Minister Hilmi Guler were visiting the United States.

Guler told CNN-Turkey on January 11 that Turkey and the United States have agreed to jointly explore Iraqi oil and gas resources, adding that Washington understood Turkey’s position on Iran and that Ankara needed Iranian gas to meet its urgent energy needs.

Iraq currently delivers crude oil exports through a pipeline that connects to Turkey’s Mediterranean coast.

However, U.S. sources close to a meeting between Guler and U.S. Energy Secretary Samuel Bodman in Washington told Jamestown that Washington did not understand Turkey’s point on Iran and that it has once again reminded Ankara about the Washington’s 1996 sanctions policy against countries making investments in Iran.

The Turkish rationale of stating its intention to go ahead with fresh Iranian deals is based on a belief that even if Tehran cuts gas flow to Ankara on and off, it still supplies this hydrocarbon to Turkey and that there already is a pipeline in place for these deliveries. But there is no concrete agreement regarding alternative routes, including with Turkmenistan, let alone available pipelines.

An oil and gas law has been awaiting adoption in the Iraqi parliament, offering a relatively long-term solution to Turkey’s energy needs. Critics, however, point out that getting gas from Iran’s Southern Pars gas field will take more than five years.

Meanwhile, Yusuf Gunay, who was until recently president of Turkey’s Energy Market Regulatory Board (EPDK), believes that Iran’s policy of halting gas exports to Ankara is a form of blackmail, due to what he described as Ankara’s stalling on signing the Southern Pars gas exploration agreement.

“It is not a coincidence that Iran stopped supplying gas to Turkey prior to President Gul’s visit to the U.S.,” he claimed, asserting that the United States has been behind Turkey’s hesitation to go ahead with the Iranian gas deal (Zaman, January 9).

Meanwhile, Turkey’s energy needs are growing. Forecasts suggest that Turkey will consume 37.5 billion cubic meters of gas this year, according to a recent statement released by EPDK. The Energy Ministry, meanwhile, is predicting that the share of natural gas in Turkey’s electricity production will reach to 49.1% (99.5 billion KWH) this year, up from 48.6 % (92.8 billion KwH) last year.