Wednesday, August 18, 2010

Turkey selling gasoline to Iran - at a nice profit

From Reuters:

Turkey's decision to sell gasoline to Iran despite U.S. sanctions, designed to squeeze the Tehran's supply of petroleum products, has shone a spotlight on the two countries' growing trade relationship.

Turkey already buys a third of its [natural] gas imports from Iran and is looking to expand its relationship to power sales and the transit of Iranian gas to Europe.

Iran is the second-largest crude oil producer in the Organization of the Petroleum Exporting Countries (OPEC) but relies on imports for up to 40 percent of its gasoline needs because it lacks refining capacity.

The U.S. sanctions, in addition to measures from the European Union and the United Nations, aim to pressure the Islamic Regime over its nuclear programme, which the West says may be a front for building nuclear weapons.

Iran has been forced to look to Turkey, Russia, China and even Venezuela for gasoline as a result of the sanctions, which have discouraged its traditional suppliers in Europe and Asia.

After not selling any gasoline to Iran in the previous 18 months, Turkey in June started to supply the equivalent of 10 percent of Iran's total monthly gasoline use, according to figures from the Turkish government and Iranian oil ministry.

The sale of 1.2 million barrels netted Turkey revenues of $121.8 million -- 25 percent above the normal market rate -- even before sanctions took effect.

Turkey's sales of gasoline to Iran nose-dived in July as sanctions took effect, but the Turkish Energy Minister said on Wednesday the government would support private firms that looked to trade refined petroleum products with Iran.

A source at state-owned oil refiner Tupras (TUPRS.IS: Quote), who did not wish to be identified, perhaps summed up the current mood in Turkey: "For us, Iran is more important than America, because we get crude oil from them. We don't get anything from America."

So why exactly is Turkey considered an ally again? Gasoline is Iran's Achilles' heel and of all the half-hearted and belated Western sanctions on Iran, this is the one that had the highest likelihood of working. Now it is being sabotaged by our Turkish friends.

And the window of using that as a pressure point is closing, according to Iran's Fars news agency:
Official data also said that Tehran has imported 1 mln tons of gasoline during the last two months and after the approval of the UN Security Council 1929 sanctions resolution against the country.

The United Arab Emirates (UAE), Turkey, Turkmenistan, the Netherlands, Singapore, Oman and Saudi Arabia have been Iran's main gasoline suppliers in the last four months.

Meantime, Iranian Oil Minister Masoud Mir-Kazzemi announced in July that the country will turn into a gasoline exporter with a production capacity of 170mln liters in 2013.

Saying that several petrol refining projects are underway in the country, Mir-Kazzemi reiterated that Iran will develop a daily production capacity of 170mln liters of gasoline in three years, while the country's daily domestic consumption will only amount to 66mln liters and it can, thus, export its excess production.