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Iraqupdates.com: Turkish firms, Shell set up Iraq gas JV

12 March 2007 (Reuters)

Turkish companies and Royal Dutch Shell have set up a consortium to bid for a gas production licence in Iraq and build a pipeline to Turkey’s energy hub of Ceyhan, an industry source said on Friday.

“There is a joint venture that has been set up to that end among TPAO (state-owned Turkish Petroleum Inc), Shell, (state pipeline operator) Botas and (Turkish firm) Tekfen,” the source told Reuters at an energy conference in Istanbul.

The pipeline would run parallel to an existing oil pipeline from Iraq’s Kirkuk to Ceyhan on the Mediterranean.

The source said the production of gas and its transport to Turkey were a focus of discussions between Iraqi, Turkish and U.S. officials at a meeting on Friday in Istanbul.

Turkish Energy Minister Hilmi Guler confirmed the meeting, saying it had been successful, but declined to comment on what had been discussed.

“This meeting was the first. We will meet again soon,” he told Reuters on the sidelines of the energy conference.

The U.S. State Department’s Deputy Assistant Secretary Matt Bryza, who attended the talks, said on Thursday Washington supported Turkey becoming a transit point to Europe for Azeri and Iraqi gas to provide a new source of gas and break the dominance of Russian giant Gazprom.

Bryza said the energy map of Europe would change if gas from Iraq could be incorporated in the future with gas from ex-Soviet republics such as Azerbaijan and Kazakhstan, but said this would require clear signals to investors.

Last week, Guler said foreign firms had expressed interest in working with TPAO, Turkey’s state oil exploration firm, in its search for crude and natural gas in northern Iraq.

The latest energy moves follow the Iraqi cabinet’s recent endorsement of a draft oil law that regulates how the war-shattered country’s oil wealth will be shared between its ethnic and sectarian groups.

The law, which must still be approved by the Baghdad parliament, allows regional administrations in Iraq to negotiate contracts with international energy companies.

But it would also put oil revenues into a central account which would then be distributed according to population.

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.

But despite such political tensions, more than 600 Turkish firms are operating in northern Iraq. Analysts say Turkish exports to the Kurdish government there, including fuel, totalled about $5 billion in 2006 alone.

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