Iran Japan

Japan prime minister to visit Tehran, with energy security the main concern

As Japan looks to ensure security in the region, it could play a vital role in negotiating between Iran and the US.

Japan is the third-largest economy in the world, needing a regular supply of energy from reliable sources and routes. 

The diversification of energy resources is, therefore, a key pillar of Japan’s energy policy, in particular as it imports most of its oil from the Middle East. Saudi Arabia is Japan’s main oil supplier and besides Saudi Arabia, the UAE, Russia, Kuwait, Qatar and Iran supply additional oil.  Stability and peace in the region directly affect Japan’s energy security and economy.

Any tension or conflict in the region from which Japan imports energy or on a route it travels may increase the oil price, resulting in a significant negative impact on Japan’s economy as well as other major oil importers. Japan is therefore attempting to play an active diplomatic role in the Middle East to decrease the impact of tensions in the region. As the fourth largest consumer and importer of oil in the world, the largest importer of liquid gas (LNG) and the second largest importer of coal after China, it has no choice but to mediate regional Middle Eastern risks.

Japan’s major oil suppliers

In 2018, Saudi Arabia and the United Arab Emirates were the largest suppliers of oil to Japan with Iran coming in sixth. According to Japan’s Ministry of Finance, its crude imports from Iran dropped 42 percent in April compared to March, reaching 169,000 barrels a day on average. In March, the country imported an average of 292,000 barrels of oil a day from Iran. In February, Japan’s oil imports from Iran reached 76,000 bpd. At the time of Iran’s sanctions waivers the government of Japan extended insurance of state-owned oil imports from Iran for one year. This was the Japanese government’s move to encourage its refineries to continue importing oil from Iran.

Zarif’s Visit to Japan

During the last few months, Iran has begun to actively lobby diplomatically to increase its relations with major Iranian oil buyers; Iran does not want to lose its share in regional and world oil markets. Last month Iran’s Foreign Minister, Mohamad Javad Zarif, visited Tokyo and met with Japanese Prime Minster Shinzo Abe and Foreign Minister Taro Kono.

Taro Kono in his press conference after meeting with Zarid said: “We are very worried about the Middle East and will not hesitate to try to reduce tensions and resolve confrontations.” He emphasised that Iran needs to continue to uphold its commitments under the Iran Nuclear Deal, urging Iran to maintain its implementation. Zarif, at a meeting with his Japanese counterpart, said that Iran continues to honour its commitments under the Iran Nuclear Deal, despite US withdrawal from it. During his trip to Japan, the Iranian foreign minister told reporters that there is no way to negotiate with the United States. Zarif had set the goal of his trip to Japan to confront the “tension” of the United States.

Trump’s Visit to Japan

Japan is one of America’s closest allies. President Donald Trump visited Japan recently meeting with Japanese Emperor Naruhito and Shinzo Abe. Trump, in his joint press conference with the prime minister, asked Japanese businessmen to make more investments in the US. North Korea and Iran were also major topics which Trump focused on in his meeting with Shinzo Abe. Trump in his visit to Japan, said of Shinzo Abe’s visit to Iran: “I know that both Japan and its prime minister have good relations with Iran. We will see what will happen.”

Japan’s private and state-led companies with high technology and enough financial capabilities hold the potential to invest in Iranian infrastructure and oil and gas fields. Iran needs billions to recover its oil and gas production capacity; due to sanctions after the 1979 revolution Iranian oil and gas production capacity dramatically decreased, and without foreign technology and financial capability it will not be easy for Iran to increase oil and gas production capacity. Iran’s petrochemical and refinery sectors also need foreign investment due to ageing infrastructure the majority of petrochemical and refineries need to be repaired.

Shinzo Abe to visit Tehran

The relationship between Tehran and Tokyo has always been peaceful and based on mutual respect. One of the focuses of economic cooperation between Iran and Japan after the expansion of relations between the two countries in recent decades has been the issue of energy and contracts for oil and gas.

Shinzo Abe’s trip to Iran will be the first visit by a Japanese prime minister in over 40 years and has become particularly important regarding intensive diplomacy between Iran and the United States and tensions in the region. The continuation of energy imports from Iran is not the main concern for the Japanese government. The country can easily find an alternative to Iran’s oil and gas condensate, countries such as Saudi Arabia, Kuwait and the Emirates can easily meet the needs of the Japanese energy market. LNG imports from Qatar and the United States could also replace Iran’s gas condensate in the Japanese energy market.

Japan’s energy security will not be affected by US sanctions against Iran’s oil exports. However, any possible agreement between Iran and the United States will be in the interest of Japan. With the abolition of sanctions, Japanese companies can invest in oil and gas fields, refineries, and renewable energy in Iran. The country’s products will also have a greater chance of selling in the Iranian consumer market.

Is it possible for Japan to be mediator between Iran and US?

Japan’s major concern is decreasing the likelihood of conflict and tension in the region. The tensions and conflicts in the energy supply countries of Japan, as well as the routes that bring oil and gas resources to the Japanese market, have a direct impact on the security of energy and economic growth in the country. The major import of Japanese oil from Saudi Arabia, the UAE and Kuwait, and any military engagement in the region, especially in the Strait of Hormuz, directly threatens not only the energy security, but also the economy of the country. Any possible conflict in the region would mean an increase in oil prices, which would not be pleasant for the economy of major energy consumers, including Japan.

Given that the 12 pre-conditions by US Secretary of State Mike Pompeo have not yet been eliminated, if the talks are negotiated with Japan’s possible mediation, it would be difficult to reach an understanding between Iran and the United States in the current situation. If Iran and US officially choose Japan as mediator, it could play an important role.

It should be noted that negotiation without a precondition is different from the new agreement without a precondition. It is hoped that with Shinzo Abe’s trip, the tension in the region will be somewhat reduced.

Any conflict in the region and insecurity for oil tankers would be detrimental to all energy producers and consumers in the region. Shinzo Abe’s visit to Tehran will increase Japan’s role and political presence in the region and will enable Japan to play a role in stabilising security in the region. 


https://www.trtworld.com/

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US Oil Embargo Stalls Iran-India Energy Relations

Before the Trump administration decided to target Tehran’s oil exports, Iran and India experienced a positive trend in relations.



India was Iran’s second largest oil customer, importing 457,000 barrels of oil a day before the US withdrew from the Joint Comprehensive Plan of Action (JCPOA) in May 2018. Last November, India was one of eight countries that received a six-month waiver to continue importing Iranian oil; it bought 300,000 barrels per day during this period. In April, however, the Trump administration did not renew the waivers. India announced on May 24 that it would abide by US sanctions and stop all such imports.



US sanctions also forbid foreign investment in Iran’s energy sector. In the past, India had expressed interest in developing the Farzad B gas field, which is shared between Iran and Saudi Arabia. In 2008, an Indian company, the Oil and Natural Gas Corporation (ONGC), discovered the field, whose reserves are estimated at around 22 trillion cubic meters. India made a $3 billion offer to Iran for a thirty-year extraction of this field, from which Saudi Arabia already produces 500 million cubic meters of gas a day, but was turned down. In 2016, Saudi Arabia signed a $1 billion contract with Indian and Singaporean companies to increase production in its share of the field from 500 million cubic meters per day to 2 billion cubic meters.

Energy security and resource diversification is a key pillar of Indian foreign policy. India is the third largest consumer of oil in the world and imports about 80 percent of its oil needs. 

In recent months, the US has increased its own energy exports to India and signed a 20-year contract to export liquefied natural gas (LNG) to India. Iraq and Saudi Arabia are also seeking to increase their share in the Indian oil market. 



India’s largest refinery, Indian Oil Corporation, this year signed its first long-term agreement to import US oil. The contract, worth $1.5 billion, covers 60,000 barrels per day from March 2019 to March 2020. The company previously bought US oil from the spot market and signed a short-term contract in August 2018 to buy 6 million barrels of oil from the United States between November 2018 and January 2019.



According to India’s Minster of Petroleum and Natural Gas, Dharmendra Pradhan, India will compensate for the gap caused by the drop in Iranian oil imports by importing oil from other OPEC member countries. In addition, India will look to the United States and Mexico to meet demand for gasoline, diesel and other refined petroleum products. 



One area of India-Iran cooperation that has so far escaped US sanctions is the Chabahar port in southeastern Iran on the Gulf of Oman. India aims to use the port to increase its influence in the region, as well as to gain more market share from Afghanistan, Central Asia and the Caucasus. India has now become one of the world’s leading exporters of goods and services. Finding a route that reduces the time it takes to deliver goods and desirable in terms of cost and security is a constant concern for Indian officials and businessmen. The Chabahar port can serve as a gateway to Turkmenistan, Afghanistan, Uzbekistan, Kazakhstan, Azerbaijan, Armenia, Georgia and Russia. India could also use Pakistani ports to access the Central Asian and Caucasian markets, but Chabahar is politically and economically more affordable and more reliable.

Despite India’s public acceptance of the US oil embargo, analysts believe that Indian oil imports from Iran, while significantly reduced, will not completely end. It is expected that Iran can still sell 100,000-150,000 barrels per day (bpd) to smugglers in international waters who will then deliver this to India. 



However, India oil imports are down 57 percent from April 2018. India importedabout 277,600 bpd from Iran this April, down about 31.5 percent from March.The Indian government has announced that it will postpone final decision on Iran’s oil imports until after Indian general elections. Meanwhile, Iranian Foreign Minister Mohammad Javad Zarif has held talks with his Indian counterpart, Sushma Swaraj, during his visit to New Delhi on May 14. 

During the previous sanctions period, India continued to import oil from Iran and paid imported oil money with Indian currency, the rupee. It seems that the government of Narendra Modi will try to continue importing oil from Iran. New Delhi is currently mulling over plans to use Iran Pasargard Bank in India to make the transactions for Iranian oil. 



India is likely to buy oil from Iran with a special discount, but the main question is how it will be possible for the Indian government to pay oil money to Iran. It is important to note that during 2017 and two years after the signing of JCPOA, Iran has not received all money from India for exports oil during pervious sanctions. 



The Modi government is interested in expanding energy relations with Iran, but without solving the money transfer problem, it will be difficult for Iran to export more oil to the Indian market. Another key issue is how much the Modi government will be able to resist the Trump administration’s pressure to cut off Iranian oil imports.



In the longer term, however, Iran needs to solve its problems with the United States to realize its energy potential. Iran’s energy sector needs more foreign technology to boost oil and gas production capacity. Otherwise it will lose its regional and global market share.



Considering that Iran’s oil buyers are finding alternatives to Iranian oil, it seems that Iran may have a hard time recapturing its share in the oil market because of uncertainty about US sanctions. Energy diplomacy needs to be redefined and the role of energy in Iran’s foreign policy needs to be reviewed. Indian private companies have good experience and enough financial resources to contribute to the Iranian oil sector, but Iran must first resolve its disputes with the United States and improve its legal framework for foreign investment.

Omid Shokri Kalehsar is a Washington-based senior energy security analyst, currently serving as a visiting research scholar in the Schar School of Policy and Government at George Mason University. Omid is a PhD Candidate in international relations at Yalova University, Turkey. Follow him on Twitter: @ushukrik.

www.atlanticcouncil.org

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US sanctions and the future of Turkish-Iranian energy ties

April 17, 2019

On paper, Turkey and Iran should be natural partners when it comes to energy. On the one hand, Turkey has a growing demand for oil and gas and lacks significant domestic resources, making it highly reliant on imports. On the other hand, Iran has huge hydrocarbons reserves — the world’s fourth largest for oil and second largest for gas, according to the U.S. Energy Information Administration. In reality though, things are more complicated. Energy relations between the two countries are not without their challenges, foremost among which are U.S. sanctions on Iran and disputes over pricing, although there is also a strong opportunity for greater cooperation in the form of Turkey’s efforts to become a regional energy hub.

At present, Iran is one of Turkey’s leading suppliers of oil and gas. According to figures from the Turkish Energy Market Regulatory Authority (EMRA), as of January 2019, Iran was Turkey’s third-largest source of oil imports by volume, accounting for 12.35 percent of the total, behind Iraq (23.5 percent) and Russia (15 percent). It was also Turkey’s second-largest supplier of natural gas, accounting for just over 14 percent of the total, behind Russia (31.6 percent) and narrowly ahead of Azerbaijan (13.9 percent) and Algeria (12 percent).

U.S. sanctions
The reimposition of U.S. sanctions on Iran in October 2018 has presented an immediate and obvious hurdle to Turkish-Iranian energy ties. In the aftermath of the U.S. move, Turkey’s purchases of Iranian crude oil reportedly fell to zero, according to news reports. Since then, however, they have picked up again. Turkey was one of eight countries that received a temporary sanctions waiver enabling it to continue buying Iranian crude for a limited period of time, on the condition that it work to reduce its imports of Iranian oil and find alternative suppliers. The waivers are currently set to expire in May, and it is unclear as yet if the Trump administration will extend them. Nevertheless, the trend when it comes to oil imports from Iran is clearly downward: According to figures from EMRA, they fell by nearly half from January 2018 to January 2019, from 22 percent of total imports to 12.35 percent.

Pricing dispute
Pricing has long been a bone of contention between Turkey and Iran when it comes to energy. Under a 25-year agreement signed in 2001, Iran exports 10 billion cubic meters of gas annually to Turkey at a price of $507 per thousand cubic meters. Turkey first objected to Iran’s prices in 2009, when it said they were too expensive and demanded a discount. Soon after, an arbitration court granted Turkey a 12.5 percent discount on the original price. In 2012 Turkey took action against Iran again, suing it for overpricing on gas sales, and in 2016 the International Court of Arbitration (ICA) ruled against Iran in its dispute with Turkey. After reviewing the case, the ICA ordered Iran to reduce its gas prices by 13.3% by the end of 2016 and pay $1.9 billion in compensation to Turkey due to overpricing.

Iran’s gas prices are indeed much higher than those of its competitors, Azerbaijan and Russia, making it unlikely that Iran will be able to maintain its share of Turkey’s energy market unless it takes action. The current natural gas contract between the two countries is set to expire in 2026, and Turkey is planning to construct infrastructure to boost imports from Azerbaijan and Russia in regions of the country that primarily consume Iranian gas at present. Considering these factors, if Iran wants to maintain its role as a key natural gas exporter to Turkey and extend the existing contract past 2026, it will need to offer additional discounts or other incentives.

Turkey’s efforts to become a regional energy hub
One major potential opportunity for closer cooperation is Turkey’s ambitions of becoming a regional energy hub, leveraging the country’s geography and pipeline network to serve as an energy corridor between the oil-and-gas-rich states of Central Asia and the Middle East and the major consumer countries in Europe. If Turkey can put in place the required infrastructure and liberalize its energy market, this goal may be achievable, and energy imports from Iran could help it to realize this objective.

In line with its broader aim of becoming a regional energy hub, Turkey is working to diversify its oil and gas supplies as a central part of its energy policy. At present, the country is planning to import more natural gas through projects such as Turk Stream, an undersea gas pipeline running from Russia to Turkey. Liquefied natural gas (LNG), primarily from Qatar and the U.S., is also playing a growing role in the Turkish energy market. Imports from the latter jumped from nothing to nearly 8 percent of the total in just one year, from January 2018 to January 2019, according to figures from EMRA.

In theory, Iran could play a greater role here as well, but boosting the volume of Iranian gas exports to sell on to other countries would not be easy. Iran needs foreign technology and financing to increase its production, but due to U.S. sanctions neither is likely to be forthcoming until Iran can solve its problems with the West over its nuclear program, missile tests, and human right issues. In addition to addressing its geopolitical problems, Iran also needs a legal framework that would help to attract foreign investment. Without foreign energy firms and foreign capital, Iran will be not be able to produce more oil and gas for export. It will also need to address the issue of reliability, which has long been a problem with Iranian gas exports. If the country is to play a greater role as a supplier, it needs to guarantee that it will not cut the flow of gas, especially in wintertime.

Despite their proximity and complementarity as producer and consumer, Iran and Turkey face considerable, if not insurmountable, hurdles to closer cooperation on energy. If they can manage to overcome the challenges associated with U.S. sanctions and pricing and leverage the opportunities presented by Turkish efforts to become a regional energy hub, the two may well be able to finally make the most of what should be a natural partnership.

Omid Shokri Kalehsar is a Washington-based senior energy security analyst, currently serving as a visiting research scholar in the Schar School of Policy and Government at George Mason University. Omid is a PhD candidate in international relations at Yalova University, Turkey. The views he expresses are strictly his own.

www.mei.edu

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The Future Of Iran-Pakistan Energy Relations

Energy relations form one of the main pillars of Iranian-Pakistani relations. In 1990, increased domestic demand for natural gas led Pakistan to begin negotiations to export gas from Iran. India’s growing energy demand led to joint support for a 2,700-kilometer “Peace Pipeline” that would allow India and Pakistan to import Iranian resources. According to the initial agreement, 1,100 kilometers would be constructed in Iran, 1,000 kilometers in Pakistan, and 600 kilometers in India. A projected 150 million cubic meters of gas would be exported daily to India and Pakistan, with 90 million cubic meters for India and 60 million cubic meters for Pakistan.

In 2011, however, due to U.S. pressure, India withdrew its support for the Peace Pipeline. This was bad news for Iran, which hoped that the pipeline would help develop and expand its friendship and cooperation in the region. Nevertheless, Iran completed the required pipeline to deliver natural gas from South Pars to the Iran-Pakistan border by December 2014. But Islamabad has not taken any practical steps to keep to its end of the deal.

Pakistan’s former Ministry of Foreign Affairs spokesman has stated that in order to achieve long-term goals of regional stability, Pakistan’s national interest require new energy transit projects. Pakistan supports the economic strengthening of the region and has stated that the energy and energy sectors are important factors in realizing regional political and economic goals. But it has increasingly looked to places other than Iran to develop these resources.

One of Pakistan’s alternatives to diversifying energy resource is the TAPI project, a U.S.-backed rival to the Peace Pipeline proposed back in 1990 to deliver Turkmen natural gas to India via Afghanistan and Pakistan. India joined the project in 2008. The leaders of the four countries signed an implementation contract in December 2015, and practical work finally began in 2016. The first gas will start to flow in early 2020. The project will cost an estimated $7-9 billion and will transfer 90 million cubic meters of gas per day to these countries.

Liquified natural gas (LNG) now forms 50 percent of Pakistan’s energy basket, and this will increase in coming years due to Pakistan’s new agreements with LNG suppliers. In February 2015, Pakistan signed a $21 billion deal to buy 500 million cubic feet of gas a day from Qatar. The arrival of Qatari gas will alleviate but not solve Pakistan’s energy crisis. So, Pakistan is looking elsewhere. Because of the shale gas revolution, the United States became an energy exporter by 2017 and plans to send about 3 million cubic feet to Pakistan. The Russian energy giant Gazprom is also considering the possibility of supplying 5-7 million tons of LNG annually to Pakistan. In July 2014, Pakistan and Gazprom signed an agreement to construct three LNG terminals, and the first shipment arrived in July 2015. Pakistan and Azerbaijan also signed deals in 2016 for the latter to supply electricity, crude and refined oil products, and both LNG and liquefied petroleum gas (LPG). The Azerbaijani state oil company SOCAR will begin delivering LNG to Pakistan in the coming months.

At present, Pakistan lacks 4,000-7,000 megawatts of the energy it needs. Iran is a natural place to turn. But the cost of Iran’s gas is too expensive for use in Pakistan’s power plants. The electricity generated from Pakistan’s power plants, mainly located in Baluchistan province, costs $3.5 per one million units, while the figure for Iran’s gas is $12. Increasingly Pakistan is looking east. Thanks to the China-Pakistan economic corridor, Islamabad will soon be able to generate electricity from coal-fired power plants and import electricity from places like Turkmenistan. The larger goal of the China-Pakistan Economic Corridor project is to turn the Gwadar Port into an energy hub in the region. Islamabad is also trying to address part of its electricity shortage through other projects such as the Casa 1000 project, which is designed to boost the electricity trade between the Central Asian countries of Tajikistan and Kyrgyz Republic and the South Asian countries of Afghanistan and Pakistan.

Iran needs to rely on energy diplomacy to maintain regional markets and especially to reduce tensions with neighbors, thereby paving the way for advanced economic benefits. Pakistan is investing in renewables and planning to increase the share of renewables in its national energy basket with the construction of a hybrid solar-wind energy system to bring energy to rural areas. If Pakistan can attract foreign capital and technology to build required energy infrastructure (such as LNG terminal and pipelines), it will require less Iranian natural gas and electricity, instead relying on others to make up the shortfall. U.S. sanctions against Iran will be another factor influencing Pakistan’s preference for energy partners.

www.lobelog.com

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What connects Turkey and Iran? – A look from Washington – EXCLUSIVE

Omid Shokri Kaleshar

Senior Energy Security Analyst, Washington, specifically for Eurasia Diary

Yesterday Turkish President Recep Erdogan negotiated on the regional crisis with the Iranian President Hassan Ruhani and, in particular, a referendum on Syria and Iraq with Iranian officials. Turkey suffered more from the Syrian crisis and presented about 3 million Syrian refugees living there. By October 2017, Turkey donated about $ 30 million to Syrian refugees. Iran and Turkey together with Russia have the potential to solve the Syrian problem, but they also need to cooperate with the US on this issue.

The Iranian and Iraqi forces conducted trainings near the border with the autonomous region of Kurdistan in Iraq, especially after tension raised after the referendum on independence. Last week, the head of the Turkish military headquarters, General Hulusi Akar, visited Tehran for talks with the leading military and political figures of Iran, who are expected to deal with border security and the fight against terrorism, along with regional problems.

 

Turkey and Iran agreed to strengthen military ties after referendum in Iraqi Kurdistan, where more than 90% of population voted for independence. Iran with Iraq and Turkey can expand military cooperation and conduct military exercises near the borders of Iraq in order to effectively counter regional instability.

There is a Kurdish minority lives in both of countries and they want to create a Kurdish state that directly affects national security, and it is expected that they will apply the same policy in this matter. Energy-intensive Turkey imports large volumes of natural gas from Iran. Both countries are seeking to enhance banking and trade ties in order to triple bilateral trade to $ 30 billion a year in the coming years after the lifting of international sanctions against Tehran.

The preferential trade agreement between Turkey and Iran turned out to be a huge disappointment during the first two years, when bilateral trade lagged behind the $ 35 billion target that the deal was supposed to reach. The agreement, which entered into force on January 1, 2015, aimed at reducing tariffs for about 300 products in order to triple the volume of trade. The results, however, were far from ideal, not even reaching one-third of the goal. While the Iranian market caused the appetite of the world’s trading giants, Turkey showed itself in a very favorable position, being the closest neighbor with already existing tariffs. Nevertheless, there were many disappointments. Despite the lifting of sanctions, Turkish-Iranian trade in 2016 was 100 million fewer than in the previous year, which meant the collapse of the preferential trade deal in just two years.

 

Starting from the first year, the deal resulted in an unexpected result: instead of growth, the volume of trade between the two neighbors declined. Turkish-Iranian trade amounted to 9.76 billion dollars at the end of 2015 dollars. Not only at 25 billion dollars smaller than the target, but also by $ 4 billion below the level of 2014 in the amount of 13.7 billion dollars. In 2016, Turkey’s exports to Iran amounted to 4.97 billion dollars. compared with 3.66 billion dollars. in the previous year, while imports from Iran, including natural gas, amounted to 4.7 billion dollars., compared with 6.1 billion dollars. in 2015.

Turkey had a positive balance of trade with Iran for the first time in 16 years. Even if this is a small surplus (only about $ 270 million), the fact that the balance is changing in favor of Turkey is a noteworthy development, the result of a steady trend over the past four years. Considering the instability in Iraq and the referendum in Iraqi Kurdistan, Iran has the potential to supply oil and gas to Turkey.

Iran and Turkey should prepare a joint plan, which take into account their national interests regard to the regional crisis, especially in Iraq and Syria. Instability in the region does not benefit the regional states, and it should be noted that both countries are neighbors. The regional crisis requires regional cooperation, and also with the main actors in the region, no country in itself has the capacity to address the regional crisis.

In summary, Iran and Turkey have their own interests in the region, and in some circumstances there is a clash of interests, but by 2017, after the Syrian crisis and after the referendum in Iraqi Kurdistan, both countries, cooperating with Iraq on the issue of Iraqi Kurdistan, and with Russia, and with the United States in the Syrian crisis, should play a more active role. Instability and chaos in these regions directly affect the stability and security of Iran and Turkey. Regional cooperation and large entities in the region are needed to solve the regional crisis.

http://ednews.net/en/news/interview/196428-what-connects-turkey-and-iran

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Energy is a Backbone of Azerbaijan-Turkey Relations

Europe is a constant hunger for oil and gas despite the development of the alternative energy resources. In this regard Azerbaijan takes an important role for Europe. Baku-Tbilisi-Kars is a chain that will unite East to the West. Energy consultant Omid Shokri Kalehsar commented Eurasia Diary’s questions on the Azerbaijan-Turkey relations and Baku-Tbilisi-Kars railways project.

 

– Yesterday the President of Azerbaijan arrived to Turkey. What are the objectives of the visit?

 

– Azerbaijan–Turkey relations have always been strong with the two often being described as “one nation with two states” slogan. Erdogan attended in opening cermony of  Baku- Tbilisi- Kars Railway project.the project designed to be a new corridor that will connect Azerbaijan, Georgian and Turkish railways.  The project implementation began in 2007 and construction began in 2008 and it foresees the rehabilitation and reconstruction of 178 km-long railway .This project will effectively open a new rail-only corridor from the Caspian Sea to Europe via Turkey, eventually excluding the need for sea transportation once the planned rail tunnel under the Bosporus Strait in Istanbul is complete.

 

The Baku-Tbilisi-Kars project could also open a North-South rail corridor linking Russia to Turkey. This line will transport both freight and passengers and is expected to provide an alternative freight transport route to routes that transit through Iran. Energy play key role in Turkey-Azerbaijan relation and it can be describe of backbone of their relations. Both countries are interested to play important role for transporting goods from region to the consume market and in this regard Baku- Tbilisi- Kars Railway project hold a potenail to help these counteris to gain political and economic benefits.

 

Durign Erdogan trip to Baku,both president express there willing  to develop bilateral relations, increase trade volume and mainly there plan to begin using TANAP project soon. Erdogan in his last visit to Baku has expressed his country’s support to Azerbaijan’s  position on Nagorno-Karabakh.He  said that Turkey and Azerbaijan have a unanimous stance on the Armenian-Azerbaijani conflict. According Erdogan: “We speak the same language and act from the same positions”.

 

Erdogan’s remark came in response to the reports that Azerbaijan’s wishes to see Baku in the OSCE Minsk Group mission (which mediates peace between the conflicting parties).

 

 

– What role will Azerbaijan and Turkey play in the supply of energy resources to Europe?

 

– Azerbaijan began to present itself as a key ally in the European energy market, partly by retaining an interest in having a potential role in the Southern Gas Corridor. Many international transport routes, including the Baku-Tbilisi-Ceyhan, Baku-Supsa, Baku-Novorossiysk oil pipelines and Baku-Tbilisi-Erzurum, Azerbaijan-Georgia, Azerbaijan-Iran and Azerbaijan-Russia gas pipelines originate namely from Azerbaijan.It is believed that TANAP, which will later be linked to TAP. The Southern Gas Corridor project envisages the transportation of the gas extracted at the giant Shah Deniz field in the Azerbaijani section of the Caspian Sea. Gas deliveries to Europe are expected just over a year after the first gas is produced offshore in Azerbaijan.The Southern Gas Corridor pipeline system has been designed to be scalable to twice its initial capacity to accommodate additional gas supplies in the future. Shah Deniz 2 gas will make a 3,500 kilometer journey from the Caspian Sea into Europe. The existing South Caucasus Pipeline will be expanded with a new parallel pipeline across Azerbaijan and Georgia, while the Trans-Anatolian pipeline will transport Shah Deniz gas across Turkey to join the Trans-Adriatic Pipeline, which will take gas through Greece and Albania into Italy.The first gas supplies through the corridor to Georgia and Turkey are given a target date of late 2018.

 

 

 

According to the Strategic Plan of the Turkish Ministry of Energy and Natural Resources (2015-2019), diversification of energy resources is a top priority. Turkey is interested in using its geographic position in the region to become an energy transit country and regional hub for oil and gas from the Caspian Basin, Central Asia, and Iran, to European markets. Turkey is interested in using its geographical position to play a key role in the energy market.

 

Turkey needs more investment in infrastructure to increase the capacity of its refineries and natural gas storage facilities. It could be argued that energy would help Turkey to improve its relations with the EU and enhance its candidacy status. Both sides could use the increased energy and diversification of energy resources to strengthen beneficial relations and gain mutual advantage from an energy agreement. That said, many of these plans are still in the early stages of development, and it will take years for them to come to fruition. However, in the meantime it remains to be seen what advances will be made in the short term, and how quickly Turkey’s ambitions as a transit country materialise.

 

– I would like to hear your opinion on the Nagorno-Karabakh conflict. The other day Ilham Aliyev and Serzh Sargsyan met. But Sargsyan does not want to return Azerbaijani territories. What can you say about this? 

 

– In Nagorno-Karabakh conflict Minsk group has play key role but during its history we can see a little progress in its attempting to solve Nagorno-Karabakh problem. Recent meeting betwen  tow preseident has no clear effects on future this conflict.The meeting, which takes place on the initiative of the Organization for Security and Europe (OSCE) Minsk Group, will come more than a year after the leaders of the two nations last met. Minsk groups espicaly Russia hold a potentail to solve Nagorno-Karabakh conflict and is able to pressure both parties to be more active in negation process with aim of solving Nagorno-Karabakh conflict.

http://ednews.net/en/news/analytical-wing/206247-energy-is-a-backbone-of-azerbaijan-turkey-relations

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US LNG and Turkey’s Energy Security

The shale gas revolution had provided the US with an opportunity not only to become energy efficient, but also a natural gas exporter. US interests in energy exports hinges on boosting relations with neighbors and allies. Turkey’s growing economy and equally increasing energy demands make it a good candidate for US liquified natural gase (LNG) supplies. At present, Turkey imports most of its natural gas from Russia, Iran and Azerbaijan.

 

The US’ LNG has the potential to provide an alternative to Iranian natural gas in Turkey’s domestic market. Trump is currently actively trying to decrease Iran’s influence in the region and weaken its economy. Turkey is a major costumer of Iranian natural gas and uses gas from Iran to cover excess winter demand in its South. However, the real question is Turkey’s lack of integrated natural gas infrastructure. Turkey will need more investment to create an integrated infrastructure. Current Iran-Turkey natural gas agreements will end by 2026, and more LNG imports from the US wuld provide an opportunity for Turkey to gain the upper hand in negotiations to decrease natural gas prices for next decade if both countries want to extend this agreement.

 

Turkey is also dependent on Russian natural gas, importing more that 50% of natural gas from Russia. Russia and Turkey’s joint construction of the Turkish Stream pipeline will lead to further integration once in operation. Turkey will import natural gas from the Turkish Stream and also export gas to Greece via this pipeline. Last June, Turkey also begin to import natural gas from the TANAP project: Azerbaijan will also increase its share in Turkish natural gas market.

 

In the past few years, Turkey has made significant contributions to the realization of this dream, with significant investments in infrastructure, especially in terms of pipeline development and increased capacity for the maintenance of LNG and has even supported Qatar in its endeavors to do the same. The country’s natural gas storage capacity will double by 2023 to 11 billion cubic meters. If this is achieved, Turkey will preside over one of the largest gas reservoirs in the region.

 

A few years ago, Turkey began working to build an import terminal with an annual capacity of 5 to 6 billion cubic meters of gas. Cooperation between Turkey and Qatar is increasing due to agreements between Ankara and Doha on certain political crises in the region.

 

Within the scope of Kuzey Marmara Natural Gas Storage Expansion Project, there are plans to increase total storage capacity to 4,6 bcm and withdrawal capacity to 75 mcm/day. Furthermore, the TuzGölü (Salt Lake) Natural Gas Underground Storage Project in Central Turkey, whose first phase has since been completed, is planned to reach 5.4 bcm working gas capacity and 80 mcm/day withdrawal capacity by 2023.

 

The first Floating Storage and Regasification Unit (FSRU) of Turkey has been launched by the national private sector in Aliağa/İzmir to achieve supply security and diversification of gas sources. In Hatay/Dortyol, the second FSRU of Turkey has been opened. Moreover, studies on the connection of FSRU to the natural gas transmission system in Saros Gulfs are continuing by BOTAS. As Berat Albayrak, Turkey’s former Energy Minister stated: “In addition, this time we pressed the button for BOTAS ‘second floating LNG project with a daily capacity of 20 million cubic meters. With the new investments, the LNG capacity to be supplied to the system will rise to 107 million cubic meters per day. This means an increase of more than 3 times (in LNG capacity) after two years of investment. With just the steps we took in 2016, we increased the LNG capacity by 90 percent to 34 million cubic meters to 64 million cubic meters. ”

 

Turkey’s former Minister of Energy and Natural Resources claims that 78 cities have already been connected to natural gas supplies. Albayrak emphasized that installed power in the next 10 years should increase by 50 thousand megawatts: by 2018 Turkey will have constructed 17 natural gas and LNG facilities and 21 new natural gas reserve facilities. The US plans to play a more active role in Asia over the medium term by investing in related projects in 2018 and 2024.

 

The United States currently has an active terminal for liquid gas exports. There are also 6 terminals under construction and 30 terminal construction projects for liquid gas exports. At the same time, the capacity of these six terminals under construction in the United States is projected at 57.55 million tons.

 

The US can use its LNG to undercut Russian LNG and increase its share in the regional and global market. Turkey’s market is one that US LNG can contribute to and help Turley’s energy security at the sime time by reducing dependency on Russia and Iranian natural gas. LNG from the US needs to be more competitive in regional markets in general, and especially in Turkey. Turkey must attract more foreign financial resources and foreign technology and use domestic firm’s technology to invest in the required infrastructure. Similarly, such a development would provide an opportunity for Turkey to move forward in its aim to become a regional natural gas market, benefiting from its increased investment and technological capacities

 

source: https://uwidata.com/434-lng-and-turkeys-energy-security/

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