EurasiaNet Eurasia Insight - Turkey Treads Carefully in Negotiating an Energy Deal With Iran

EURASIA INSIGHT

TURKEY TREADS CAREFULLY IN NEGOTIATING AN ENERGY DEAL WITH IRAN
Mevlut Katik 9/08/06

Turkey and Iran are trying to finalize an energy deal that would open a new export avenue to the European Union. As it tries to strike a deal, Turkey is treading carefully, mindful of not wanting to upset the region’s geopolitical balance.

Following August 15-17 talks in the Turkish capital Ankara, Iranian Energy Minister Kazem Vaziri-Hamaneh announced, via the ministry’s website, that the two countries had agreed in principle on a framework for Iranian gas exports to go to Europe via Turkish pipelines.

But a Turkish Foreign Ministry source, speaking recently to EurasiaNet on condition of anonymity, indicated that a deal had not yet been finalized. "The talks are still under way," the official said. Experts are now trying to narrow technical differences. The commitment to keep talking does not assure that an export pact will ultimately be concluded, the official indicated.

The Iranian-EU export concept is intertwined with issues relating to Tehran’s gas deliveries to Turkey under a deal negotiated a decade ago. Turkish officials have long been dissatisfied with the terms of the pact, especially the price it must pay for Iranian gas, and have been seeking a revision for years. The wrangling is a major factor in the underutilization of a pipeline stretching from the northern Iranian city of Tabriz to Ankara that became operational in 2001. According to the 25-year agreement, Turkey is reportedly obligated to buy 8.6 billion cubic meters (bcm) of gas from Iran in 2006. But so far this year, Ankara imported only about 2.5 (bcm) during the first half of the year.

During the August negotiations, Hamaneh reportedly pressed Turkish officials to fill the Tabriz-Ankara pipeline’s excess capacity with gas destined for EU states. He also sought to secure an Iranian role in the development of the planned $5.8 billion Nabucco pipeline, which would connect Turkey with Austria. Construction of that route is scheduled to begin in 2008. Hamaneh indicated that a large share of the Nabucco pipeline’s capacity might be allocated to Iran. But, there has been no official acknowledgement of such an arrangement.

Europe’s vulnerability concerning its gas supplies was exposed in early 2006, when a Russian cut-off to Ukraine caused disruptions in several EU states. [For background see the Eurasia Insight archive]. As the EU strives to reduce its dependence on Russia, Iran is eager to gain a foothold in Europe as an alternate source of gas, with the apparent intention of using energy exports as a means to reduce international pressure on Tehran over its nuclear program. [For background see the Eurasia Insight archive]. Turkish officials, meanwhile, see in Iran’s eagerness an opportunity to rework its gas purchase agreement with Tehran.

In addition, Ankara has its own energy agenda, which clashes with Iran’s. Turkey is interested in turning itself into an energy trader, not just a transit country for exports. According to a report published by the Turkish daily Hurriyet, Turkish officials sought to establish a joint Iranian-Turkish venture that would manage European exports. Iran reportedly rebuffed the idea, and wants to maintain full control over the exports while paying Turkey transit fees.

Iran also wants to build an refinery in Turkey. In return, Turkey asked that the Turkish state oil concern, TPAO, gain oil exploration rights on Iranian soil. Iranian officials have not provided a clear response to Ankara’s request and thus these two issues remain up in the air.

Beyond economic considerations, Turkey is proceeding cautiously out of a desire to avoid alienating two key allies � the United States and Azerbaijan. Washington, which has adopted the hardest line toward Iran on the nuclear issue, wants to keep Tehran as politically and economically isolated as possible, equating isolation with leverage to get Iranian leaders to negotiate in good faith on the country’s nuclear program. Thus, any Turkish-Iranian export deal would be sure to upset the Bush administration.

Azerbaijan would also likely be miffed by a Turkish-Iranian gas deal. Turkey and Azerbaijan are expected to open the Baku-Tbilisi-Erzurum gas pipeline soon, and Iran’s entry into the European export field could potentially threaten Azerbaijani profits. [For additional information see the Eurasia Insight archive].

Even if a deal is hashed out between Ankara and Tehran, the export plan would appear to face an ongoing security threat. In recent months, the Turkish-Iranian pipeline has been targeted by Kurdish militants, who have resumed their armed struggle in Turkey. The most recent Kurdish militant attack in late August disrupted the pipeline’s operation for three days.

Editor�s Note: Mevlut Katik is a London-based journalist and analyst. He is a former BBC correspondent and also worked for The Economist group.

The Central Eurasia Project aims, through its website, meetings, papers, and grants, to foster a more informed debate about the social, political and economic developments of the Caucasus and Central Asia. It is a program of the Open Society Institute-New York. The Open Society Institute-New York is a private operating and grantmaking foundation that promotes the development of open societies around the world by supporting educational, social, and legal reform, and by encouraging alternative approaches to complex and controversial issues.

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