Turkey heads toward gradual decline in Iranian oil imports
Turkey's oil imports from Iran jumped in August after several months of decline, but energy analysts still expect a downward trend in the midterm due to Western sanctions and growing political differences with Iran.
By Enis Senerdem for SES Türkiye in Istanbul -- 20/09/12
Turkey is gradually moving toward alternative sources for oil importing more crude from Saudi Arabia and Libya and reducing its dependence on Iran, which is under Western sanctions.
Western sanctions on Iran have forced Turkey and some other countries to resort to using Iranian oil tankers. [Reuters]
Turkey received about 36 percent of its oil from Iran in the first six months of 2011, but those numbers fell to a low of 23 percent in July 2012, according to Turkey's Energy Market Regulatory Authority.
At the same time, Saudi Arabia's share in Turkey's total oil imports jumped from 7 percent in the first half of 2011 to 13 percent during first half of this year. Ankara this year also received 4 percent of its oil from Libya – a source that was virtually non-existent in 2011 due to the revolution that toppled long-time dictator Muammar Qaddafi.
Iran is under a set of heightened sanctions from the EU and the US over its nuclear programme. The West believes Iran is moving forward to develop nuclear weapons, charges Iran has long denied.
EU sanctions on Iranian oil went into effect on July 1st. Earlier this year, the US implemented a fresh round of Iran sanctions targeting companies doing business with Iran's oil sector.
Turkey received a 180-day exemption from the impact of the sanctions after TUPRAS, Turkey's sole oil refiner, moved to cut purchases of Iranian oil by 20 percent.
In August, Turkey used Iranian oil tankers to make five crude shipments from storage containers at the Egyptian port of Sidi Kerir after TUPRAS found it impossible to insure its own tankers by Western insurers due to sanctions, Reuters reported.
However, it remains unclear whether Turkey will be granted another extension at the end of this year when the current extension expires.
"Iran is not an energy partner that Turkey can cut ties with overnight. Oil contracts are usually long-term deals. Turkey is showing its compliance by gradually diminishing oil purchases from Iran," Hasan Selim Ozertem, a researcher at the Ankara-based International Strategic Research Organisation, said.
Energy experts point out that the flow of oil from Iran will not cease completely, but that Turkey's good faith efforts to cut the share of Iranian in total imports would result in another extension of exemptions at the end of the year.
"Despite everything, oil imports from Iran will continue and Turkey will receive an extension for exemptions," Necdet Pamir, an energy expert and former member of the World Energy Council's Turkish National Committee, told SES Türkiye.
Ozertem told SES Türkiye that he believes Turkey will continue to cut its oil imports from Iran as new sources become available.
"However, forcing Turkey to halt all oil purchases from Iran will be counterproductive both for the West and Turkey," Ozertem said. "When the exemptions end, Turkey and Western nations will find a common ground to keep the balances in place."
Apart from the Iran sanctions, the political balance in the region is affecting Turkey's approach toward Iranian oil. The prospect of moving away from Iranian oil has larger political implications for Ankara as common interests in the energy trade soothes over growing political differences between Iran and Turkey over issues like Syria, NATO's missile defence shield and most recent allegations Iran is supporting the PKK.
But Bezen Coskun, an assistant professor of international relations at Zirve University, agreed that a sudden stop of Iranian oil will not be an option for Turkey, especially as peak energy demand during the winter will drive up costs.
"Despite Turkey lowering its dependence on Iranian oil, it is still an important energy source for the country. The Turkish Energy Ministry is aiming for a gradual reduction and elimination of dependence on Iranian oil. However this is a medium-term goal," Coskun said.