The United States is holding talks with Iraq and Turkey to drum up investment to restart Iraqi gas production and exports to Europe, a U.S. official said on Wednesday.
"It could be linked up to the (Azeri-Turkish) Baku-Erzerum pipeline," U.S. State Department Deputy Assistant Secretary Matthew Bryza told a conference in Baku. "The United States is hurrying to create the conditions in Iraq for investors to want to put money into restarting gas production there," he said.
Turkey, Iraq and the United States planned to continue talks on developing Iraq's energy sector, having held an earlier round of talks in March, he said."There are not yet any assessments of the investment needed for Iraq's gas infrastructure. But it will be necessary to invest in improving the existing gas infrastructure, even though there are problems guaranteeing its security," he said.
Azeri president Ilham Aliyev told the same conference on Tuesday his country will increase gas output to 16 billion cubic meters in 2008 from 12 bcm this year and start large-scale exports to Europe via the Baku-Erserum pipeline.
The pipeline will get most of its volumes from the giant Azeri Shah-Deniz field on the Caspian Sea, operated by BP and Norway's Statoil and involving Russia's LUKOIL, France's Total and Iranian and Turkish state oil firms.
Channelling Iraqi gas through the pipeline would add a new source of gas to Europe's supply mix and weaken the dominance of Russian gas monopoly Gazprom, which will increase its 25 percent share of the European market in decades to come.
It could also provide gas for the Nabucco pipeline, European project which is under threat because of Gazprom's boycott and Russia's control of gas flows from Central Asia.
TURKEY'S CHOICE
But an energy official in Ankara said Turkey favored an alternative route to the Baku-Tbilisi-Erzurum (BTE) line. "Exporting Iraqi gas via the BTE would be a very difficult, problematic and expensive project. Instead of this line, Iraqi gas could be linked to the pipeline via Diyarbakir or Siirt," the energy ministry official said.If Turkey's envisaged project materializes there will just be a distance of 130 km (81 miles) from the Iraqi border," he said.
An industry source told Reuters in March that Turkish firms TPAO, Botas and Tekfen and Royal Dutch Shell had set up a consortium to bid for a gas production license in Iraq and build Turkey's favored alternative pipeline to its Mediterranean oil port Ceyhan.
Turkey has a complex relationship with the mainly Kurdish north of Iraq. Its army generals and politicians have sometimes threatened to take military action to crush separatist Turkish Kurdish rebels hiding in the mountains there.
More than 600 Turkish firms operate in northern Iraq. Analysts say Turkish exports to the Kurdish government there, including fuel, totaled about $5 billion in 2006.
(Reuters, 06/06/2007)