Iraq Resumes Kirkuk Oil Exports A Year After Halt

Iraq resumed on Friday oil exports from the Kirkuk province, a year after it had stopped oil flows from the area due to a dispute with the semi-autonomous Kurdistan region, industry sources told Reuters on Friday.

Around 300,000 bpd of crude oil previously pumped and exported in the Kirkuk province to the Turkish port of Ceyhan were shut in when the Iraqi federal government moved in October last year to take control over the oil fields in Kirkuk from Kurdish forces after the semi-autonomous region held a referendum that Baghdad didn’t recognize. However, the only export outlet of the Kirkuk oil is the oil pipeline of the Kurdistan Regional Government (KRG).  

The Iraqi federal government and the KRG have been in talks for months to try to reach an agreement on resuming Iraqi exports from Kirkuk. Last week, three people close to the talks told the Financial Times that a deal is close and could be reached as early as this month.

Industry sources told Reuters that oil exports from Kirkuk resumed on Friday, with flows at 50,000 bpd-60,000 bpd. It was not immediately clear when oil flows could be boosted and by how much, according to the sources.

The KRG said earlier this month that it had recently upgraded its oil export pipeline, boosting its capacity to 1 million bpd from 700,000 bpd, to accommodate future production growth from the region.

“This extra capacity will accommodate future production growth from KRG producing fields, and can also be used by the federal government to export the currently stranded oil in Kirkuk and surrounding areas,” KRG’s ministry of natural resources said in early November—a sign that a deal with the federal government may be coming soon.

Thamer Ghadhban, the new Iraqi oil minister, said at the end of last month that Iraq’s federal government “will work to overcome all obstacles” regarding the resumption of oil exports through the Kurdistan region.

The resumption of Iraqi exports from Kirkuk is also a win for the U.S. which has been prompting Iraq and Kurdistan to reach a deal on exports, to help replace Iranian oil with more Iraqi exports. U.S. Secretary of Energy Rick Perry said in September that Iraq alone could add 300,000 bpd of oil to global supply if it allowed Kirkuk oil to reach international markets.

By Tsvetana Paraskova for Oilprice.com

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