Workers adjust a valve of an oil pipe.  (photo by REUTERS/Azad Lashkari/Files)

Turkey and Iraqi Kurdistan Explore Natural Gas Options

Author: haberturk Posted May 21, 2012

Necirvan Barzani, the Prime Minister of the Kurdistan Regional Government, is in Turkey. What is the priority issue that we are discussing with him; the PKK or energy?

SummaryPrint A completely new energy cooperation is developing between Turkey and the Kurdistan Regional Government, writes Yavus Semerci. Turkey desperately hopes to use Kurdish gas to undermine Russia’s energy stranglehold, a venture that is complicated by the PKK issue.
Author Yavuz Semerci Posted May 21, 2012
TranslatorTimur Göksel

A completely new energy cooperation is developing between Turkey and the Kurdistan Regional Government. Whatever happens in Iraq, the goal of this cooperation is to lower the natural gas costs for Turkey and Europe. Both Turkey and Europe want to end the unacceptable price policies of Russia, Iran and the countries that those two influence.

In the US, the amount of gas that can be purchased with $100 would cost around $400–450 in Turkey or Europe. In other words, if you are paying $100 per month for natural gas at home, an American consumer pays roughly $25 or, at most, $30 for the same amount of consumption. The reason is simple: Russia sets the natural gas prices, which are indexed to the price of oil. The world economy is unstable, and if there are regional tensions that cause oil prices to rise, natural gas prices follow. We are all transferring capital from our pockets to Russia, Iran, Azerbaijan and Qatar.

This chain has to be broken.

The US was the first to do this by producing shale gas. Once an importer of natural gas, the US will soon be exporting it. As far as I can gather, shale gas is harvested by a simple method. Environmentalists criticize the method, but their voice is not very effective in the US because whoever owns the land also owns what is under it, and they can do whatever they want with it. In Europe and Turkey underground resources belong to the state, which is very cumbersome at best.

So Turkey, whose annual energy bill is $60 billion per year, continues to search for cheaper energy resources. Thus Turkey hopes to get cheaper natural gas from Kurdistan, which is known to have the richest natural gas reserves in the world. Of course, this depends on if Turkey can take the appropriate steps.

Experts explain the basic difference between oil and natural gas: oil is pumped through a pipe, then a buyer comes loads it and sells it anywhere he wants via a tanker. With natural gas, the consumer must be nearby. It is possible to liquefy and transport it to further destinations, but that is too expensive to be a feasible option.

The fact of the matter is, a united Iraq or a divided one with an independent Kurdish state makes no difference. When the region stabilizes, Kurdish gas has to pass through Turkey, its nearest consumer.

If Turkey plays its cards right, it could undermine the Russian hand and forcefully lower prices. Meanwhile, it gains a friendly neighbor that will provide natural gas for years to come.

This economic fact of life has begun to alter the PKK vision of the Regional Kurdish Government. The PKK’s main base at Kandil Mountain in northern Iraq will always be a thorn in the side of Kurdish relations with Turkey, and it is ultimately against the long-term interests of Kurdistan.

If you assess the recent developments in the light of this information, it will be easier to discern the direction of Turkish foreign policy.

Read More: http://www.al-monitor.com/pulse/business/2012/05/will-natural-gas-finish-off-kand.html

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