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Turkish Minister threatens Eni interests over Cyprus exploration


ISTANBUL--Turkey' s Energy Minister Taner Yildiz said Wednesday that the government will suspend its projects with Italian oil and gas giant Eni, acting for the first time on a two-year-old threat to banish energy firms from the country from exploring for oil and gas offshore Cyprus.

"We decided not to work with Eni in Turkey, including shelving their projects in Turkey," Mr. Yildiz told reporters in Ankara on Wednesday, citing the Italian company' s operations in Cyprus as the reason for the suspension.

However, a Turkish official who declined to be identified because they weren' t authorized to comment publicly on the matter, said the government won' t seek to remove Eni from its two main active oil and gas projects in Turkey--the Blue Stream and Baku-Tbilisi-Ceyhan pipelines.

The BTC pipeline, in which Eni has a 5% stake, carries Azeri oil to the Turkish port of Ceyhan, with a capacity of 1 MMbopd.

Blue Stream is an Eni joint venture with Moscow-based Gazprom, which transports Russian gas to Turkey. The pipeline, which cost about $2.4 billion to build and carried its first gas in 2003, provides about a third of Turkey' s annual natural gas consumption of approximately 45 Bcf.

Eni is also a partner of Istanbul-based Calik Holding in a project to build a 550-km crude oil pipeline to connect the Black Sea port of Samsun with the Mediterranean port of Ceyhan.

Calik will make its own evaluation on its partnership with Eni, Mr. Yildiz said, adding that Turkey would prefer that the Istanbul-based company doesn' t to work with the Italian company.

Calik Holding wasn' t available to comment. A spokesman from Turkey' s Energy Ministry didn' t return phone calls and email inquiries.

Eni Chief Executive Paolo Scaroni said in Rome that the pipeline project with Calik is currently "dormant", but the company remains optimistic about it. "I hope relations with Turkey return to their previous excellent levels--also with Minister Yildiz," said Mr. Scaroni.

Drilling in contested waters around Cyprus is against international law, Mr. Yildiz said. Eni' s exploration agreement in Cyprus adheres to European Union rules, said Mr. Scaroni.

The retaliation against Eni follows the firm' s debut offshore exploration agreement in January with the internationally recognized Greek-Cypriot government in the divided eastern Mediterranean island. The license is a strategic step by Eni to enter the Levantine Basin, a triangular slice of the Mediterranean between Cyprus and Israel that may hold 50% more natural gas than all European Union countries combined.

Turkey, which invaded the northern part of Cyprus in 1974 to prevent a coup aimed at uniting the island with Greece, doesn' t recognize the Greek-Cypriot government in Nicosia. Ankara maintains that unilateral exploitation of natural resources is against Turkish-Cypriot interests and ongoing United Nations efforts to reunify the island. In 2004, Greek-Cypriots overwhelmingly rejected a UN plan their Turkish counterparts accepted.



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