Turkey and the Kurdish regional government (KRG) are in the final stages of talks on a giant Turkish investment in the Kurdish oil and gas sector, the Financial Times reports. The proposed deal would seek to create a new “energy corridor” that by the end of the decade could send Turkey as much as 3MMbbl/d of oil and 10bcm of natural gas a year.
Citing four senior Turkish officials the Washington Post reported two days ago that negotiations between Turkey and the KRG on a pivotal oil deal had entered the final stages. Hence this latest piece of news is unlikely to be completely fresh for the market. Also, the deal is surrounded by various complexities: heightened tensions between Ankara and Baghdad; US opposition to any deal which may threaten the unity of Iraq and push Iraqi Prime Minister Nouri al-Maliki closer to Iran; the potential disintegration of Iraq could create the prospect of a greater independent Kurdistan, destabilizing the largely Kurdish southeast of Turkey etc
. As a result, the positive impact on MOL’s and Tupras’ share prices is likely to be muted for now. Nevertheless, a sealed deal would certainly help the political derisking of MOL’s position in Kurdistan, which is worth up to US$ 2.8bn (or HUF
6,288 per share). The deal would also be positive for Tupras, which could further diversify its crude
acquisition sources and replace the missing barrels from Iran.