People close to President Recep Tayyip Erdoğan are the beneficiaries of a lucrative oil deal signed between Ankara and Arbil that has laid the framework for the transfer of Kurdish oil, as the company granted the exclusive right to the transfer through Turkey is run by a former deputy candidate from the ruling party and an ex-official from Çalık Group, a company known to have ties with the ruling party.
Furthermore, according to a book written by the Hürriyet daily's Washington correspondent, Tolga Tanış, Powertrans, the company that was given the exclusive license to carry and trade Kurdish oil by the cabinet shortly after its foundation in 2011, is run by Berat Albayrak, who is married to Erdoğan's daughter, Esra Albayrak.
Who are the people behind Powertrans? Well, Turkey has sought an answer to this question since the establishment of the company. According to trade registry data, the general manager of the company is a former deputy candidate from the Justice and Development Party (AK Party) Ahmet Sadi Güngör, who also previously worked in the Petroleum Trade Coordination department of Çalık Group. For this reason it is claimed that the company's secret partner is Çalık group.
Players making profit from oil deal between Arbil and Baghdad not known.
On Dec. 29, 2013, a new relationship between Turkey and Kurdistan began. On that day, Ankara and Arbil signed a series of agreements that had been in development for some time. The agreements, valid for 50 years, regulate the delivery of Kurdish oil and gas to the Ceyhan district of Adana, products which will then be sold on the international market.
As expected, Baghdad fiercely opposed the deal, accusing Arbil of “being in pursuit of independence.” The Maliki government also accused Turkey of “interfering in the sovereignty rights of Iraq,” but by then the genie was out of the bottle, and Ankara added new agreements to the deal in March 2014.
Access to Kurdish oil was indeed a great opportunity for Turkey and the region. But things did not go well. A transparent oversight mechanism open to international monitoring announced by Energy Minister Taner Yıldız was never established. Today it is unknown who buys Kurdish oil and who then sells it to whom at what prices, or how Turkey gains from the trade. It was only after Baghdad's appeal to an international court of arbitration that people learned the names of the local and foreign companies selling Kurdish oil on international markets.
Due to the failure to establish a transparent mechanism to oversee the sales of oil extracted in northern Iraq, little is known about the buyers and sellers of the oil, extracted by the Kurdistan Regional Government (KRG), the price at which it is sold, or what Turkey gains as a gateway country for the Kurdish oil to be sold on international markets. The oil extraction capacity of the Kurdish region rose to 400,000 barrels per day as of January, while 150,000 of those barrels are sold on the domestic market.
The rest is flown to the Ceyhan pipeline in line with the agreement signed with Baghdad, while a portion of this oil is given to some oil extraction companies in order to pay off Kurdistan's prior debts. According to information given by the Vice President of Arbil Chamber of Commerce and Industry Mele Mecid, the foreign companies and the Turkish companies extracting oil take 30 percent of all extracted oil in order to cover debts Arbil is unable to pay in cash. Oil companies then sell 30 percent of the oil they extracted on international markets at prices they determine.
On the other hand, no transparency has been achieved on the identity of the bank where these petro-dollars will be deposited, an issue which Ankara, Arbil and Baghdad have been negotiating. It had been announced that the parties had agreed on state-run Turkish bank Halkbank. Yıldız even announced in October 2014 that $700 million had been deposited in Halkbank. However, it is still a mystery how much revenue has been made by the sale of Kurdish oil today.
Due to regional circumstances, there is no mechanism in the KRG to monitor and oversee oil sales. The only functioning supervising authority is the Committee on Natural Resources in the Kurdistan Parliament. The committee obtains information from Minister of Natural Resources Ashti Hawrami periodically.
In an interview with Sunday's Zaman, committee head Sherko Cevdet provided information about the official data and the process regarding oil sales.
“Kurdish oil is sold at low prices due the economic crisis in the Kurdish region. As of January, 34 million barrels of oil were sold, which is equal to $2.5 billion,” he said. “Oil companies and some intermediaries are making big money. No one wants them to be disclosed,” he continues.
Cevdet added there are some 30 companies from 19 countries operating in the Kurdish region and it is difficult to make oil sales transparent and place the sales under supervision.
According to him, in order to make the sales of Kurdish oil more transparent, the disagreement between Baghdad and Arbil should be overcome. But there is little hope for a resolution of the crisis in the near future.
When asked, Arbil Chamber of Commerce and Industry Vice President Mele Mecid said, “What is the role of Ankara in the sale of Kurdish oil?” He said Turkey has a vital role in the sale of Kurdish oil after the energy agreement between the KRG and Turkey, which fundamentally changed the oil trade.
“There used to be tankers which shipped oil through land and a railway until the deal was made with Turkey. After the agreement, a limitation was placed on the trade made through tankers because Kurdish oil now flows directly to Ceyhan,” he says.
“The sale of Kurdish oil is under the control of the Turkish Energy Ministry. The ministry knows how much oil was sold, who bought it and how much money was deposited because the agreement stipulates so. On the subject of private companies, well, every government can grant some privileges. Turkey could have given privileges to some companies as well,” he added.
Delay in money transfers with Halkbank
“It is true that there is a bank account of Kurdistan in Halkbank. All the petrodollars used to be deposited there. But now not all the money is accumulated in Halkbank. Two new accounts were opened in the US and Germany as money transfers was not convenient with Halkbank. Money is now being transferred more rapidly. Halkbank was transferring money slowly due to a shortage of cash. Because of that, new accounts have been opened,” says Cevdet.
Even Kurdish Parliament does not know the fate of the money deposited in Halkbank. “We don't know how much was withdrawn from the money accumulated in Halkbank. We don't know how much interest rate the money yielded as well,” Cevdet said.
Iraq possesses 8.7 percent of oil reserves in the world, which is equal to 143 billion barrels. Around 30 percent of Iraqi oil reserves are located in the Kurdish region.
A total of 550,000 barrels of oil a day flow into Ceyhan from the Kurdish region and Kirkuk.
Powertrans: Mysterious company granted privilege in Kurdish oil
Return to the biggest question regarding Kurdish oil: Which Turkish firms are participating in the sale of oil from northern Iraq? Is Powertrans, which was founded by businessmen close to President Erdoğan, selling Kurdish oil from Ceyhan to international markets as claimed?
The knowledge of Kurdish authorities and the businessmen involved in the oil business in the region regarding those who are selling the oil is limited. This is due to the fact that the procedure on the sale of oil was not institutionalized at Kurdish administrative level.
In addition to Natural Resources Minister Ashti Hawrami and Prime Minister Nachirvan Barzani, only a few have thorough knowledge on the subject. Furthermore, the Kurdish authorities are not interested in those who sell oil in Ceyhan because of the terms of the agreement.
Nonetheless, the officials Sunday's Zaman spoke to say the answer to the question is in the deal signed on November of 2013.
Interestingly, before Kurdish oil flowed into Ceyhan, debates on who would sell the oil had come onto the agenda of Parliament.
Republican People's Party (CHP) deputy Aytun Çıray in a parliamentary inquiry had asked the energy minister what the agreement with Arbil featured, who was granted the license and privilege to transport Kurdish oil and, if it was true as claimed, according to which criteria Powertrans was given the privilege. However, no answer provided, as expected.
In response to a parliamentary question posed by CHP deputy Mevlüt Dudu on May of 2013, the ministry acknowledged that Powertrans had been given license to ship Kurdish oil from the Mediterranean to world markets.
But the questions asking which companies besides Powertrans had applied to transport the oil and according to which criteria the selection had been made were left unanswered, though it constituted an outright breach of the Constitution and Parliament bylaw.
Today no one, including Parliament, knows the terms of the agreement made with Arbil. Why? Because the KRG is not a sovereign state and thus the agreement made with it is not considered similar to agreements signed between states. It is qualified as an agreement based on terms of private law.
It also means the agreement did not require Parliament's approval. The monitoring of an agreement worth billions of dollars was thus circumvented on a technical legal pretext.
On the other hand, Powertrans' inclusion in the agreement is shrouded in mystery. According to data obtained by Sunday's Zaman from KRG officials, Turkey founded an off-shore company to extract and sell Kurdish oil. The agreement with the KRG on the production of oil was made via this company.
The partners of the company that will operate in the six fields in the KRG include the Turkish Petroleum Corporation (TPAO) and the Turkish Petroleum International Company (TPIC) -- nothing wrong here. But according to claims, the company also has domestic and foreign partners that are subjected to private law terms. Could these partners include Powertrans? It's highly likely. What is certain is that Powertrans has the privilege to buy and sell Kurdish oil flowing to Ceyhan.
Powertrans not responding to allegations
Though Powertrans has been at the center of debates for some time, no official explanation has been provided by company officials. Our request for a meeting was not accepted by officials staying at a plaza in Maslak.
The officials of the company, who left our questions unanswered, said “According to our business contract, even a general manager might be fired if he provides information about the company,” and upon our insistence, said if we sent questions via e-mail, they would notify the headquarters in Singapore and we would then be contacted by the headquarters.
But two weeks have passed and no response has been provided by Powertrans to the below questions:
-Does Powertrans export northern Iraq oil? In which other regions and countries does the firm have a presence?
-Is Powertrans the only firm entitled to export Kurdistan's oil flowing to the Kirkuk-Yumurtalık pipeline?
-How much of the sales of 34 million barrels of oil since June of 2014 was done by Powertrans?
-What is the duration of the privilege granted by the Customs and Trade Ministry to Powertrans to sell oil?
-Is the money obtained by Powertrans after oil sales deposited in the Halkbank account of the KRG?
-Does your company have a partnership with the Çalık Group?
My questions may solve the mystery in the sales of Kurdish oil in Ceyhan to a certain extent. But the claims of illegality and fraud about the oil trade have not been satisfactorily explained because the answers should be provided by the Energy Ministry and the government that should monitor and provide transparency on the agreement.
Updated 05 Apr 2015 | Soruce: Todays Zaman |