US Complicates Turkey’s Energy Interests in Iraq, Iran

The US currently sanctions trade with Iran and does not support the Kurdistan Regional Government (KRG) of Iraq’s attempts to trade energy independent of central government control from Baghdad. Furthermore, the US has recently warned Turkey, which has not only expanded the scale of its oil and gas imports from Iran, but also ships KRG’s crude oil via truck instead of using Baghdad-controlled oil pipelines.

A contradiction here is clear. In opposition to their own government's actions, US-based Exxon Mobile and Chevron are now exploring KRG oil fields. Moreover, despite the ongoing dispute with the central government, the National Iranian Oil Company (NIOC) owns shares in Azerbaijan’s Shah Deniz field, which is led by BP, Shah Deniz and comprises the main supply of sources for the southern energy corridor project to Europe.

Turkey is searching for new energy sources, first, to meet its growing energy hunger. Second, Turkey wishes to one day become to a regional energy hub. In the coming decade, this search will shape the country’s relations with its oil- and gas-supplying neighbors, in spite of its longstanding international alliance and commitments, such as with the US. 

Despite US sanctions, Turkey remains Iran’s biggest natural gas consumer. It imports about 22% of its gas and 44% of its oil from Iran. In the last few years, as a result of US pressure, Turkey has made some efforts to reduce its oil imports; however, it is unlikely to drop to zero. Moreover, during his visit to Iran in late April, Cevdet Yilmaz, Turkey's minister of development, called for the expansion of economic ties with Iran, currently measured at $22 billion. A US reaction to this declaration is expected soon, as Turkey’s energy trade with Iran was done under a gold-for-gas formula and the US has recently widened its control of precious metal sales to Iran.