Exclusive: Turkey works to cut dependence on Iranian oil

GENEVA/LONDON Thu Jan 19, 2012 1:56pm EST

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GENEVA/LONDON (Reuters) - Turkish refiner Tupras plans to cut its dependence on imports of Iranian oil and will meet Saudi Arabian authorities this month, industry sources familiar with the company's strategy said on Thursday, as Western powers crack down on Iran's oil sales.

Turkey imports more than 30 percent of its daily consumption from Iran and has so far given no indication that it will comply with a planned European Union import embargo on Iranian crude.

But one of the sources said that Iranian threats to shut down the world's most important oil export route, the Strait of Hormuz, had helped push Turkish oil officials to try to reduce the country's heavy dependence on Iran's oil.

Iran has made no move to shut the world's most important oil export route, which had a daily flow of almost 17 million barrels last year, but has threatened action if Europe implements new sanctions.

Another of the sources said Tupras officials were planning to meet Saudi Arabian oil authorities this month, with a view to switching to alternative sources of crude by the summer.

Tupras declined to give an immediate comment.

"I think the meeting is to learn the supply capacity ahead of (state oil company Saudi) Aramco's other clients," said the first source, adding that other oil producing countries would also be contacted.

"I don't think Saudi can cover all of the import requirements. You must consider demands made by China, Korea, India, Japan also," he said

"Maybe at most, half of its Iran imports may be substituted," he estimated.

A Saudi source said the kingdom's oil authorities were getting more orders to replace Iranian crude but declined to comment on specific requests.

The first source said Turkey was also planning to meet with oil suppliers from Russia, Azerbaijan and West Africa.

According to sources familiar with the Russian oil market, Turkey has begun to show an increased interest in its crude supplies.

"Tupras has been recently buying more Urals. I guess right now everyone is trying to diversify from Iran one way or another," one trader said.


The Obama administration is mulling its options to make countries cut their imports of Iranian crude, without driving oil prices higher and risking hurting the U.S. economy in an election year.

Tensions in the Gulf have caused occasional spikes in oil prices in recent weeks, and major importers of Iranian oil have opposed an embargo on Iranian crude, fearing this would send oil prices rocketing at a time when they can least afford it.

Officials in Saudi Arabia, however, have signaled they are ready to fill a supply gap.

U.S. officials have travelled to China, South Korea and Japan to persuade some of Iran's biggest customers in Asia to cut purchases.

The European Union is likely to agree on an oil embargo against Iran Monday, France's foreign minister said on Thursday.

Real cuts in Europe will take time, however. The countries that are most reliant on imports from Iran are also those most exposed to the euro debt crisis.

Italian, Greek and Spanish companies have already said they planned to extend most of their oil supply deals with Iran and expected to win a sanctions reprieve from the EU for six months or longer.

But even if the West implements sanctions, it is unclear whether it will succeed in choking off a vital source of income for Iran.

China, the biggest buyer of Iranian crude, has stepped up opposition to an embargo in recent weeks. India, which relies on Iran for around 12 percent of its crude, has said it will continue to do business with the Islamic Republic.

(Reporting by Emma Farge in Geneva and Jessica Donati in London; additional reporting by Dmitry Zhdannikov, Amena Bakr and Humeyra Pamuk; Editing by Jane Baird)

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Comments (6)
Sal20111 wrote:
Without meaning to cast any aspersion on the political and security aspects of the sanctions on Iran, this is certainly good business for Saudi Arabia and the supporting corporate network in the US. Also good for smugglers, and the oil black market.

Jan 19, 2012 4:26pm EST  --  Report as abuse
RobertFrost wrote:
What a strange calculus:

“But one of the sources said that Iranian threats to shut down the world’s most important oil export route, the Strait of Hormuz, had helped push Turkish oil officials to try to reduce the country’s heavy dependence on Iran’s oil.”

If the Straight of Hormuz were blocked, oil from the Gulf Sheikdoms and Saudi Arabia is no longer available… Even the plan for a pipeline which was supposed to take Saudi oil to the Red Sea was canceled a few days before the US began its campaign for international blockade of Iran.

So how is the clever Turk going to get oil from Saudi Arabia? By straws?

The truth of the matter is that the Turkish Islamist government plans to drop its dependence not only on Iranian oil, but gas as well. The discussions with the Saudis are unrelated to the blockage of Hormuz, unless the Turks are using a strange map!

One observes that the Turks and the Iranians fought since the late 16th Centuries. The last conflict which was followed by the 18th Agreement took place in 1918, the year the Ottoman Turks were thrown out of the Arab countries.

Today, they reckon they are on the ascendance again. A risky bet, given the international situation, the election year in the US, and the absolute distaste the people in the US have for more ‘Bush-Type’ adventures.

Jan 19, 2012 5:21pm EST  --  Report as abuse
fatih_ wrote:
RobertFrost: Turks and Iranians signed Treaty of Zuhab in 1639, and then they never fought for almost 4 centuries. you can read an article about it on wikipedia, instead of writing such baseless comments, like ” Turks and the Iranians fought since the late 16th Centuries. The last conflict which was followed by the 18th Agreement took place in 1918″ bla bla bla…

Jan 19, 2012 6:27pm EST  --  Report as abuse
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