Strategic Partnership between Turkey and Iran in Enegry sector

Discussion in 'Middle East - General' started by ekrem, Apr 7, 2007.

  1. ekrem

    ekrem VIP Member

    Aug 9, 2005
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    Turkey's plans to establish a strategic partnership with Iran in energy sector drew criticisms from US. 'We're watching the situation with concern' says US diplomat

    ANKARA – Turkish Daily News

    The United States on Friday expressed its concern and objection regarding Turkey's plans to establish a strategic alliance with Iran in the field of energy. �We're watching the situation with concern,� said a U.S. diplomat from the American Embassy in Ankara.

    Turkey and Iran have agreed to build a long-term cooperation in the energy sector, namely drilling oil and natural gas, construction of three natural gas run power plants and the transfer of Iranian oil and gas to Europe. Considered as a �drastic shift� in its energy policy, however, this new step by is considered as vitally important by Turkey in order for it to become a global player as well as a local hub in the energy market.

    Long awaited deal:

    Cooperation with Iran in all of these energy areas will be undertaken through joint ventures. During lengthy discussions, Turkey proposed an equal footing joint venture based on drilling new oil and gas wells as well as their transport to Europe through Turkey. Iran, with the second largest natural gas reserves in the world, thus will be able to deliver necessary resources to Europe. Turkey plans to become a trade partner in energy, not just a transit point collecting transfer fees.

    The Iranian side welcomed the offer, which was discussed during Iranian Foreign Minister Manoucher Mottaki's February visit. Turkey will acquire the right to operate Iranian natural gas reserves if an agreement is reached. Turkey has already pledged $2 billion for the sole purpose of marketing and operating Iranian natural gas.

    The European Union, which is seeking to diversify its energy sources and thereby reduce its dependence on Russia, would prefer to purchase Iranian gas, told sources familiar with the issue to the Turkish Daily News. No new pipeline needs to be constructed since a natural gas pipeline already exists from the Iranian border though to Greece.

    Oil is the third pillar:

    The agreement between Ankara and Tehran also includes the construction of three natural gas power plants in Iran, which will produce 2,000MW of electricity each. One-third of the 6,000MW total energy output is intended for domestic use and the rest will be traded. Iran previously offered providing 1 billion kWh for a year to Turkey for 3.5 cents per 1kWh. Union for the Coordination of Transmission of Electricity's (UCTE) standards must be met before the transfer of energy. This task will be completed by the end of this year.

    Oil will constitute the third pillar of cooperation. Construction of a refinery, oil exploration and marketing of Iranian oil through Ceyhan are included in the partnership package. The transfer will be carried out through Batman-Yumurtalık line, an operation that requires further investment on pipelines. Iranian oil will reach world markets from Ceyhan energy terminal with oil tankers.

    US opposes Turkey's plans:

    However, the Turkish governmental plans with Iranians drew criticisms from the United States. A U.S. diplomat, on the condition of anonymity, told the TDN that they are watching the situation with concern. �It is U.S. policy to oppose any investment by a third-party country in Iran, including the energy sector,� underlined the diplomat.

    Turkish-Iranian Joint-Venture (50:50) will be set up.
    Company will make upstream and downstream in oil and natural gas sector.
    1 refinery to be built in Turkey.
    3 thermal plants based on natural gas to be built in Iran with 6.000 MW.
    Current Iranian capacity is +- 40.000 MW.

    2.000 MW of 6.000 MW is guaranteed for Iranian use, 4.000 MW will be exported to Europe.
    Turkey and Iran will market Iranian ressources 50:50.

    USA in isolateing Iran, world's 2nd largest natural gas ressources, from Europe fails.

    Those are big investments.
    In February Iranian foreign minister already said this:

    Your english is better, does this mean 10 billion whole, or 10 Billion $ each state?

    Electric plants will produce 1 KW/h for about 3,5 cents.
    In Turkey it is 5,4 cents. In Italy 14,5 cents.
    Customers will buy electric, natural gas and refined oil products from our hands like crazy.

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