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Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

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300,000 Bpd Offline As Kurdistan Conflict Continues

Oil

Crude oil flows from Kurdistan to Turkey’s port city of Ceyhan continued at rates of between 200,000 and 250,000 bpd over the weekend, versus a normal flow of between 550,000 and 600,000 bpd, sources from the shipping industry told Reuters.

Last week, Iraq’s Oil Minister Jabbar Al-Luaibi ordered state-held oil and pipeline companies to begin restoring oil flows from Kirkuk to Ceyhan via a pipeline that bypasses Kurdistan, increasing pressure on the breakaway region, but this has apparently not happened yet.

Exports of Kurdish crude began declining last week, after the Iraqi army took over the city of Kirkuk, the oil center of northern Iraq, and surrounding fields. Following the takeover, Kurdistan’s oil minister made a special plea to international oil companies to not quit Kurdish oil, which is essential for the security of the autonomous region.

“I plead with you not to forget Kurdistan. The fight [against ISIS] is over, but our fight is there forever. When we talk about investments and projects, we must bear in mind… that investment cannot flourish if there is no security,” said Ashti Hawrami at a conference in Italy last Thursday.

Also last Thursday, Iraq’s Oil Ministry issued a statement saying that it “warns seriously all the countries and oil companies from contracting or dealing with any authority inside Iraq without taking the approval from the federal government and the ministry of oil.”

Related: Why Petrol Powered Cars Aren’t Going Anywhere

The situation is complicated and likely to continue until the dust from the Kurdistan independence referendum settles. Meanwhile, commodity traders including Vitol, Trafigura, and Glencore, along with Russia’s Rosneft, have tied a total US$3.5 billion in crude-for-cash deals with the Kurdistan Regional Government.

The change in control of the oil fields around Kirkuk threatens the supply of crude to the trading firms, some of which have taken out debt to provide Erbil with the cash, for which it is supposed to pay in crude deliveries.

By Irina Slav for Oilprice.com

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