Turkey, Saudi discuss long-term oil purchase


Turkey, Saudi discuss long-term oil purchase


ISTANBUL--Turkey has started talks with Saudi Arabia about long-term oil purchases, Turkey's Energy Minister Taner Yildiz said Tuesday, appearing to mark Ankara's latest move to reduce its reliance on Iranian oil as regional tensions have seen the neighbors' policies diverge.

"We have started spot purchases from Saudi Arabia, and also started negotiations on long-term agreements (for oil purchases)," Yildiz told reporters in Ankara, while analysts commented that Turkey was taking steps to reduce oil purchases from Iran specifically, in line with the U.S. sanctions on Iran.

According to an Energy Ministry official, Turkey is merely seeking to diversify its energy sources. "These steps were not taken in order to get in the exemption list," an official said.

Turkey's sole oil refiner Tupras (TUPRS.IS) also agreed a deal with Libya to buy 1 million tons of oil from the North African country as a one-time purchase, Mr Yildiz announced, though long-term cooperation with Libya is one of Turkey's options in seeking to diversify its energy sources.

On Monday, the U.S. State Department gave exemptions to Iranian sanctions to Turkey, as well as India, South Korea, Taiwan, South Africa, Sri Lanka and Malaysia. Exemptions are given to countries that the administration determines have sufficiently reduced, or agreed to reduce, their consumption of Iranian oil. In March, the U.S. exempted Japan and a number of European countries from the sanctions, which aim at pressuring Iran to accept limits on its nuclear program.

Under the new U.S. sanctions, foreign financial institutions doing business with Iran's central bank for the purpose of energy purchases stand to be barred from U.S. financial markets.

Turkey has repeatedly stated its determination to increase trade with Iran, while the countries are currently are at odds on many issues in the region, most notably on Syria, as Iran continues to support the Shiite regime of Bashar al-Assad.

While Mr Yildiz stressed that "there is no problem with Iran" and the country's policy is directed toward increasing trade volume with Islamic Republic, he did not elaborate how that would be possible, or how talks with Saudi Arabia could benefit Turkish-Iranian trade relations. Analysts said the Turkish government's steps obviously had a political dimension.

"The way how the government keeps denying the problems with Iran has become ridiculous," said Atilla Yesilada, an analyst with Istanbul-based Global Source Partners, and "this rift can eventually lead to the point where petrol purchase from Iran stops altogether," Mr. Yesilada added.

In March, Tupras said it would reduce imports of Iranian oil by 20%, replacing it with crude from "other sources" that it didn't name.

The energy ministry expects Turkey's energy consumption to double during the next ten years, and is planning to secure 30% of the energy demand by petrol and natural gas. For the rest, Turkey is planning to invest in renewable energy sources, mostly hydroelectric power but also solar energy, coal, and allocate a tenth of the demand to nuclear power.

Turkey plans to have built two nuclear power plants by 2023, as Turkey's Prime Minister Recep Tayyip Erdogan stated in May.

Dow Jones Newswires

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