No political obstacles for Turkey-KRG gas pipeline

No political obstacles for Turkey-KRG gas pipeline

Baku, Azerbaijan, Jan. 12

By Aygun Badalova - Trend:

The political disagreements are not obstacle for construction of gas pipeline between Turkey and the Kurdistan Regional Government (KRG) in northern Iraq, Director of Hydrocarbons, France, Mediterranean Energy Observatory (OME), Sohbet Karbuz believes.

"I don't think that disagreements between Turkey and Iraq central government, or between KRG and Baghdad is a real obstacle to the construction of the gas pipeline, and later export of KRG gas to Turkey," Karbuz told Trend.

He reminded that under a similar situation, an oil pipeline was constructed from KRG to Turkey, and KRG oil was sold to foreign markets through shipment of oil from KRG to Ceyhan port in Turkey.

"Why would it be a problem now? And more importantly, does KRG and Turkey really care?" Karbuz said.

A tender will be held Feb. 9, 2016 in Ankara for constructing a new gas pipeline between Turkey and the KRG. Both local and foreign companies are allowed to participate in the tender. The tender's winner will build new gas pipeline in 720 days. The pipeline's length will be 181.5 kilometers.

Karbuz believes that international companies would be willing to participate in any project in this high risk area that promises to bring high reward.

However, expert also noted that the mentioned tender is for construction of the pipeline in Turkey's side to the border of Iraq.

"Who will construct, or constructing in the Iraqi side is not clear," Karbuz said.

Karbuz also believes that the target of Genel Energy to export some 20 billion cubic meters of gas to Turkey by 2020 is quite ambitious. Genel Energy is the largest holder of reserves in KRG and aims to be a main provider of gas to Turkey under the Gas Sales Agreement between KRG and Turkey.

Karbuz mentioned that gas is expected to come from two fields: Miran and Bina Bawi.

"The problem is that final investment decisions on these fields have not yet been taken. They will be taken perhaps in the second half of this year, assuming that required financing is secured," he said.

KRG and Ankara signed a 50-year contract in 2013 for natural gas supply to Turkey.

As it is expected, after completion of construction of a new gas pipeline, KRG will deliver 10 billion cubic meters of gas to Turkey. The volume of the gas supplied from Iraq to Turkey will reach 20 billion cubic meters by 2020.

Turkey imports 6.6 billion cubic meters of gas per year from Azerbaijan on the basis of a 'take or pay' contract. Turkey also buys 9.6 billion cubic meters of gas from Iran on the basis of a contract that is valid until July 2026.

Ankara also has agreements with Algeria (from 1988 to October 2024) and Nigeria (from 1995 to October 2021) for supply of 4.4 billion cubic meters and 1.3 billion cubic meters of liquefied gas per year, respectively.

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