Turkish-Israeli peace to change energy balances

Turkish Energy Minister Taner Yıldız said over the weekend that Turkey was ready to work on Iraq’s offer to construct a third oil pipeline between the two countries. There are already two which were constructed between the oil fields near Kirkuk and Mosul, first in 1977 and the second in 1987.

Yıldız had made public the Iraqi offer for a third one late last year (HDN, Dec. 8, 2012) right after Baghdad had denied flight permission to his plane on the way to an oil and gas conference in Arbil, where the headquarters of the Kurdistan Regional Government (KRG) is on Dec. 4. He had said it was Iraqi Oil Minister Abdul Karim Luaibi who had made the offer during a meeting in St. Petersburg on June 21 with the justification that increased oil and gas production makes the further use of Basra’s terminals impossible.

Now we are talking about an approximately 1,200-km pipeline (almost the total of the former two) to end up at the Ceyhan oil terminal on the Turkish Mediterranean coast, very near to İncirlik, one of the main NATO bases in the world and also the terminal of the pipeline which brings Azeri oil there via Tbilisi.

If Baghdad follows up on its own proposal, it demonstrates that it plans to diversify the export routes from the Shiite-dominated Basra region, meaning that it will be free of Iranian domination in the Persian Gulf; it will mean a direct oil route to European markets under NATO’s defense umbrella. On the Turkish side, it will be a goodwill gesture to the Nouri al-Maliki government in Baghdad that good relations with the Kurdish region and Turkish investments there do not mean that Turkey favors the division of Iraq, but on the contrary, that Ankara envisions a united Iraq with its all regions and populations together.

Over the weekend, Turkish Foreign Minister Ahmet Davutoğlu talked to U.S. Secretary of State John Kerry over the phone on the fragile situations in both Syria and Iraq, providing Ankara another opportunity to reiterate its position to highlight the importance of the political unity of the country. For Ankara, the whole process is tangential to the Kurdish peace process as the number-one issue in the country nowadays, with its extensions into Iraq.

So Ceyhan, also near the Syrian border, and now additionally protected by NATO operated Patriot anti-missile batteries, will have an increased strategic importance regarding energy security for the West.

There might be more, if the Israeli apology from Turkey ends up putting relations back on track, another big-scale energy project with a focus on Ceyhan might be reactivated – that is an oil pipeline from the Samsun port of the Black Sea down to Ceyhan to carry Russian oil. (Samsun is already the terminal of the Blue Stream underwater gas pipeline from Russia.) According to the original plan, the oil (which would bypass the Turkish straits, meaning less waiting time, tonnage restrictions and environmental hazards) would be carried to Israel’s Ashkelon terminal via tankers or another pipeline, then via an existing pipeline (ironically built in the late 1960s as an Iranian-Israeli joint venture) would be transported to the Israeli terminal of Eilat by the Red Sea, (thus bypassing the Suez Channel) to shorten up the duration, volume and thus price of Russian oil to feed India and China. And if the Bashar al-Assad regime is replaced with a new one less hostile to Turkey and Israel, the line will be even safer.

Turkey has already told the Çalık Group, which is in charge of the project, to drop its partnership with Italian Eni because of the latter’s contract with the Greek Cypriots and find another company to join Russia’s Gazprom if it still wants to have the project. That might give an idea as to whether Israelis would like to couple with Turks or Greek Cypriots in future energy projects in the region. The impact of Turkish-Israeli peace on the energy equation in the greater Middle East might really be high.