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Oil prices gained on Thursday…

KRG Announces Plans to Build Second Oil Pipeline to Turkey

Having just completed the first pipeline to carry crude oil out of the Kurdish region of northern Iraq and across the border to Turkey, the KRG has announced that a second pipeline will be built within the next couple of years.

Ashti Hawrami, the natural resources minister for the Kurdish Regional Government (KRG), made the announcement at a recent energy conference in Istanbul.

The first pipeline, which marks a milestone in the KRGs pursuit of independence from Baghdad, is being tested in preparation for the first oil exports that will flow along it at the beginning of next year.

Related article: Kurdistan Considers National Oil Company

Hawrami stated that “oil and gas exports are not the monopoly of anyone in Baghdad. It is our duty to pursue oil and gas routes independently... Turkey has been the quickest to recognise the new realities of the region.”

Turkey, heavily dependent on energy imports, has worked to build up its presence in Kurdistan, securing a close partnership with the region and offering the KRG a market where it can sell its crude, free of Baghdad’s interference.

Iraqi officials are worried that as Kurdistan becomes more and more independent, it only increases the chances that Iraq will break-up.

Hussain al-Shahristani, the Deputy Prime Minister for Energy in Iraq, told Reuters that “Turkey is aware of Iraq's concern... We have reminded Turkey that this is in breach of the agreement between the two countries that regulates exports from Iraq through the Turkish pipeline.”

But it seems that no matter what Baghdad says, or even Washington for that matter, no one can dissuade the KRG from halting its push for independence, Turkey from taking advantage of the local source of oil, nor the oil companies from signing exploration deals to help them boost production.

Whilst Hawrami was in Istanbul speaking at the energy conference, Turkish Prime Minister Tayyip Erdogan was meeting with the Kurdish Prime Minister Nacirvan Barzani to discuss energy cooperation.

Related article: Roadblocks on Iraq’s Leap of Faith to Oil Success

The first Kurdish pipeline will connect to an existing, and barely used, pipeline that runs from Kirkuk in Iraq to the Turkish city of Ceyhan, from where the oil is then exported to the Mediterranean. This pipeline has a total capacity of about 1.5 - 1.6 million barrels a day.

First pipeline.
First pipeline.

As Kurdistan plans to ramp up its production, the spare capacity in the first pipeline will be quickly used up, creating the need for a second pipeline to be built. Hawrami claimed that the next pipeline would have a capacity of at least one million barrels a day, and be complete “in the next 18 months to two years.”

By. Charles Kennedy of Oilprice.com



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