Jul 22 2019

Turkish refinery forced to buy Russian oil after sanctions cut supply from Iran – Bloomberg

Azerbaijan’s state oil company has been forced to turn to Russia to supply its refinery in Turkey after U.S. sanctions cut the flow of crude from Iran, Bloomberg reported on Sunday.

The State Oil Company of Azerbaijan (SOCAR)’s Star Refinery in Turkey’s Aegean region has agreed to buy 1 million tons of Urals crude, a tenth of its annual requirement, from Russia’s Rosneft PJSC, the refinery’s executive Mesut İlter said in an interview with Bloomberg.

The Star Refinery, opened last October in the Aegean town of Aliağa, is the country’s second refinery, accounting for a quarter of Turkey’s refining capacity.

Iran had been one of Turkey’s major oil suppliers prior to U.S. President Donald Trump’s decision to pull out of a nuclear deal signed with Tehran by his predecessor, Barack Obama, and level fresh sanctions on Iran last year.

Despite tough rhetoric opposing the U.S. policy and tight relations with Tehran, Turkey has complied with the sanctions since a waiver allowing it to continue purchasing Iranian oil expired earlier this year.

The cut of supplies from Iran has increased Turkey's reliance on Russia, already its largest energy supplier. The two countries are collaborating on projects including a dual pipeline to carry Russian gas through Turkey to Europe and the construction of Turkey's first nuclear power plant.

“If there were no restrictions, we would buy Iranian crude,” İlter told Bloomberg, adding that the refinery can purchase crude oil from anywhere “if our model supports it”.

The new refinery will boost Turkey’s local diesel production to 60 percent of demand, and with the other refinery run by Turkish petrochemical firm Tüpraş will meet the country’s entire demand for jet fuel, İlter said.