Turkey says no new US request to cut Iranian crude

 Turkey says no new US request to cut Iranian crude

Port of the BOTAŞ liquefied natural gas import terminal in Marmara Ereğlisi, near the city of Tekirdağ. (Photo: AP, Murad Sezer)

December 05, 2012, Wednesday/ 09:58:00

Amid speculations that scrutiny in Washington over Turkey's “gold for gas” deal with Iran could draw plans for a new round of US sanctions, Turkish Energy Minister Taner Yıldız on Wednesday touched upon an equally critical energy issue, saying Ankara did not received any new request from the US to reduce the level of its crude oil purchases from Iran.

“Our existing level of imports is continuing,” Yıldız said in Ankara.

In June, Washington exempted Turkey, along with six other countries, from its financial sanctions on Iran's oil trade for six months in return for a 20 percent cut in Ankara's purchases. Last week, the US Senate approved expanded sanctions on global trade with Iran's energy and shipping sectors as it continued to ratchet up economic pressure on Tehran over its nuclear programme. Washington says Tehran is enriching uranium to levels that could be used in nuclear weapons. Iran says the programme is for peaceful purposes. The new package kept in place exemptions for countries including Turkey that have made significant cuts to their purchases of Iranian crude oil.

"There is no new demand from the USA to reduce the amount of crude oil which we get from Iran," Yıldız told Reuters. "Whatever the current process is for purchasing crude oil from Iran, we are continuing that in the same way," he said. Official trade data last month showed Turkey's crude oil imports from Iran fell more than 30 percent to 75,281 barrels per day (bpd) in October from September, as substitute oil from other suppliers including Iraq and Saudi Arabia rose.

Imports from Tehran, which was once supplying more than 60 percent of Turkey's crude oil requirements, came third in October behind Iraq and Russia.

The new US sanctions also included measures aimed at stopping the flow of gold from Turkey to Iran. Yıldız said on Tuesday Ankara does not expect tighter US sanctions to apply to its natural gas imports from Iran, its energy minister said on Tuesday, which would mean Tehran will continue to supply and get paid by its biggest gas customer.

Statements from State Department spokesman Mark Toner's on Tuesday hinted at a possible US intervention in “over the flow of gold from Turkey in exchange for Iranian natural gas”. "We continue, obviously, to consult closely with Turkey -- as we do with all the countries -- on the scope of US sanctions against Iran," State Department spokesman Mark Toner told reporters at a daily briefing. … Certainly we would pursue any evidence of potentially sanctionable transactions," Toner said on Tuesday. The same day, Yıldız said purchases of Iranian natural gas are not covered by US sanctions, which would mean Tehran will continue to supply and get paid by its biggest gas customer. He was preceded by Prime Minister Tayyip Erdoğan on Monday when  he said in İstanbul Turkey will continue to buy natural gas from Iran despite the prospect of tighter US sanctions.

Turkey relies on natural gas imports from Iran and has been paying for it using Turkish lira. In turn, Tehran has used the lira to buy Turkish gold. Couriers carry the gold to Dubai and from there, it is then shipped to Iran. Turkey also imports Iranian oil as Washington has granted it exemptions from sanctions for that trade since Ankara has reduced its purchases.

Whether Washington can enforce sanctions on the gas-for-gold trade is murkier, as the fuel is paid for in lira, not dollars. The currency is of limited value for buying goods on international markets, but is ideal for buying gold within Turkey.

Over the summer, US President Barack Obama issued an order that allows Washington to place sanctions on countries that provide precious metals to Iran, in attempt to close loopholes on the sanctions that target the Islamic Republic's nuclear program.

Washington believes Iran is enriching uranium that could be used in nuclear weapons, but Tehran says the program is intended for civilian purposes. Last week, the US Senate passed a measure that aims to slow the flow of gold from Turkey into Iran. If passed into law, it would be the third round of sanctions on Iran in a year.

Turkey is likely to have little option but to continue the trade against Washington's wishes, however, as Iranian gas makes up an irreplaceable part of Turkey's energy mix.