Capital Goes Where Capital is Demanded

I would guess that Turkish Petroleum Company and its investors will profit majestically from the deal described below. I would also guess that this will not be the last deal that creatively circumvents institutional divestiture efforts.

Turkey to Finance Iran Gas Project Without Partners
REUTERS NEWS SERVICE
October 4, 2007

ANKARA, Turkey -- The financing of a $3.5 billion investment in Iranian gas production will come entirely from a state-owned company, as U.S. opposition has put off foreign investors, officials at the Turkish Energy Ministry said yesterday.

Washington is urging countries to cut business ties with Iran over its failure to suspend its nuclear-energy program, and is spearheading a drive for a third sanctions resolution against Iran in the United Nations Security Council.

The U.S. also plans new unilateral actions as a means to pressure Tehran over its nuclear program, which the U.S. says is aimed at building a bomb and Iran says is for peaceful purposes.

Senior Turkish energy officials, who declined to be named, said the Turkish Petroleum Corp. will start investing in Iran's South Pars gas-field project as soon as a comprehensive agreement is signed in the second half of this month.

Ankara and Tehran signed a memorandum of understanding in July.

"Turkey can completely cover the necessary amount for the investment," one of the officials said. The official said the project had not sought credit from foreign institutions, given their unwillingness to finance projects linked to Iran.

In Washington, State Department spokesman Sean McCormack said he was not aware of the planned $3.5 billion investment, but he reiterated U.S. opposition to such a move.

"In principle, we don't think it is the right time to be investing in the Iranian oil and gas sector given the questions surrounding the activities of the Iranian government pursuing weapons of mass destruction and also being the most significant state sponsor of terrorism," Mr. McCormack said.

Turkish Prime Minister Recep Tayyip Erdogan has defended his government's deal with Iran, saying no country can ask Ankara to give up the relationships it has with energy suppliers.