Turkey inches towards Qatar LNG deal By Saban Kardas
The Emir of Qatar, Sheikh Hamad bin Khalifa al-Thani, paid a two day visit to
Turkey on August 17-18, as the guest of Turkish President Abdullah Gul. They
signed several agreements aimed at improving bilateral relations, including
promoting closer cooperation on energy issues.
On August 17, Gul and al-Thani met in Istanbul. The Turkish and Qatari
delegations held working meetings during the day, discussing regional issues as
well as bilateral cooperation. The first signed bilateral agreement involved a
protocol concerning regulating labor issues between the two countries. The
second agreement was between Turkish Radio and Television Corporation and
Qatar's State Television to enhance broadcasting cooperation. The parties also
signed a memorandum of
understanding on waiving visa requirements for their citizens.
During the press briefing, Gul emphasized that the high-level delegation
accompanying al-Thani indicated the importance that Qatar attaches to Turkey.
He noted that economic cooperation was the most important aspect of bilateral
ties and highlighted Qatar's help in facilitating Turkey's relations with other
members of the Gulf Cooperation Council. The council is composed of the United
Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait.
Gul also referred to Qatar's constructive role in regional affairs and praised
his counterpart's efforts to mediate over regional problems. He reiterated that
Turkey and Qatar held similar positions on many issues, and that they had
worked together to promote regional peace.
Al-Thani also highlighted growing bilateral ties and expressed his
determination to further develop the relationship. He acknowledged Turkey's
role in regional policies, and his gratitude toward Ankara for its position on
the Palestinian issue.
The annual trade volume between both countries remains low at US$1.5 billion.
However, Qatar is an important destination for Turkish contractors and its
companies have undertaken multi-billion dollar projects there. Realizing the
great potential created by Qatar's infrastructure investments and its expanding
economy, the Turkish private sector wants to further penetrate this market.
The Istanbul Chamber of Commerce recently announced that as part of its "Gulf
Expansion" project, it will hold a Turkish export fair in Qatar in September.
Turkey is also eager to attract investments from Qatar to boost its own
economic development, as part of its broader attempt to turn the country into a
major destination for Persian Gulf capital.
Reflecting these interests, on the second day of the visit Gul and al-Thani
attended a working breakfast of the Turkish-Qatar Business Council, hosted by
Turkey's Union of Chambers and Commodity Exchanges and the Foreign Economic
Relations Board. Gul and the AKP government have proven instrumental in
developing closer ties with Qatar and have promoted the flow of Qatari capital
in Turkey, thanks partly to their personal ties. However, some of these
business transactions were the subject of domestic political discussions. The
joint-ventures between Qatari firms and businessmen close to the Turkish
government continue to be a source of criticism.
The parties announced that they will set up a Turkey-Qatar Joint Energy Working
Group. Gul said that they discussed the feasibility of gas pipelines, storage
facilities and refineries, as well as meeting Turkey's liquefied natural gas
(LNG) needs. Gul invited Qatar to invest in the storage facilities in Turkey's
Mediterranean port of Ceyhan, which is the terminus of the Baku-Tbilisi-Ceyhan
pipeline and the planned Samsun-Ceyhan pipeline. Ankara has promoted Ceyhan as
a global energy terminal, and al-Thani responded to this offer with great
enthusiasm.
Al-Thani said he hopes to see a "pipeline" running from Qatar to Turkey, and
that the feasibility work on that project will continue. It was unclear whether
it would be a natural gas or crude pipeline and what route it would follow.
Prior to the visit, Turkish Energy and Natural Resources Minister Taner Yildiz
had publicized the "natural gas" dimension of the bilateral meeting. Yildiz
said that talks were underway with Qatar concerning importing LNG.
Yildiz noted that his contacts with Qatar are part of a broader Turkish effort
to diversify its energy suppliers and supply routes. He said that if the
parties could reach a consensus, Turkey might import around 4 billion cubic
meters (bcm) of LNG annually from Qatar. He said he hoped to sign a declaration
on LNG imports during the visit of the Qatari delegation, yet following the
meetings no official announcement was made to that effect.
Qatar is believed to possess the third-largest gas reserves in the world,
behind Russia and Iran. It is also a leading supplier of LNG and Turkey wants
to develop cooperation with Qatar in natural gas projects. In July, Qatar was
represented during the signing ceremony of the European Union-backed Nabucco
pipeline, which will transit Turkey, and Prime Minister Recep Tayyip Erdogan
maintained that Nabucco might tap into Qatar's gas in the future.
Ankara has attempted to import Qatari LNG for its domestic needs for some time.
During Gul's February 2008 and Erdogan's April 2008 visits to Qatar, energy was
an important item on their agendas. They raised the issue of LNG imports, and
the negotiations on this have continued since.
As a country heavily dependent on importing natural gas, Turkey meets its needs
primarily through pipelines from Russia, Iran and Azerbaijan. It also has
contracts with Algeria and Nigeria to import 4 bcm and 1.2 bcm of LNG annually,
respectively. However, during the heavier winters, or when there are supply
disruptions caused by the problems mainly encountered with Iran, Turkey is
forced to buy LNG on spot markets.
Since it lacks major natural gas storage facilities, such seasonal fluctuations
result in the payment of higher sums for energy bills. Therefore, Ankara is
considering expanding the country's storage capacity and importing larger
amounts of LNG through long-term contracts, which might help it avoid such
problems in the future.
Saban Kardas is an associate instructor at the Political Science
Department, University of Utah, USA.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
