Other nations may view Turkey's recent $23 billion deal to buy Iranian natural gas as disregarding a new U.S. trade ban against Iran-a perspective Iran no doubt would encourage.
Actually, Turkey was motivated more by desperation than defiance.
It is the fastest-growing market for electricity in OECD Europe, with demand projected to grow 5%/year to 170 billion kw-hr by 2010.
Electricity production will climb 8% this year to 93.1 billion kw-hr, but that still will not be enough. Turkey is trying to buy supplemental electricity supplies from Iran this year and from Bulgaria and Georgia next year.
It even is considering revamping a 30-year-old plan to build a $5 billion, 10 billion kw-hr nuclear power plant on the Mediterranean coast.
Turkey's gas needs
Turkey fuels much of its power generation with gas, and it is clearly desperate for more supplies.
Last year it signed a deal to increase its purchases of Russian gas from 5.5 billion cu m/year to 10 billion cu m/year by 2000. The gas is exported via Bulgaria, and talks are under way for a second pipeline.
Turkey also is buying LNG from Algeria and Qatar and last year even bought a few cargoes from Australia's Northwest Shelf export project.
So the Iranian deal-which has been under negotiation for some time-is critical to Turkey's continued economic growth.
Energy and Natural Resources Minister Recai Kutan said Turkey needs the Iranian gas to avert shortages in 4 years.
The pact calls for 2-3 billion cu m/year beginning in 1999, increasing to 10 billion in 2002.
Representatives of Turkey's state pipeline firm Botas and Iranian National Gas Co. will meet next week to complete planning for the export pipeline.
It will stretch 890 miles between Tabriz and Ankara, of which 720 miles will be in Turkey. Laterals will expand the total network to about 1,250 miles.
The Turkey-Iran deal was completed only days after President Bill Clinton signed a U.S. law that imposes sanctions against non-U.S. companies that invest at least $40 million/year in future Iranian projects (OGJ, Aug. 12, p. 36).
The pipeline deal disappointed U.S. officials, especially since Turkey has long been a staunch ally in the region. But U.S. officials cautiously said it is too soon to determine if the deal would trigger U.S. sanctions against Turkish firms.
Turkey said the Iranian deal centers on gas trade, not infrastructure investments. It said it even revised the pact to omit any involvement in building the 170 mile section through Iran.
Turkey-Iraq ties
Coincidentally, Turkey also is renewing energy trade with another of its neighbors-also a U.S. nemesis.
Shipments of Iraqi oil will resume in mid-September through an export pipeline across Turkey.
They were permitted by a U.N. deal that allows Iraq to sell oil to buy food and medicine.
The 40 in. Kirkuk-Ceyhan pipeline will carry about 450,000 b/d of oil, earning Turkey millions of dollars in transit fees.
Copyright 1996 Oil & Gas Journal. All Rights Reserved.
