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Shipments of Kirkuk crude oil to Iran under an oil swap deal will begin in two weeks, Alaa al-Yasiri, head of Iraq’s oil marketing company SOMO has said, adding that the initial flow to Iran will be 30,000 bpd.
Separately, the SOMO boss said, Baghdad could restart the flow of north Iraqi crude to Turkey soon, suggesting the ongoing discussions on the topic with the Kurdistan Regional Government (KRG) might bear fruit.
For now, the main barrier to the resumption of exports to Turkey is the KRG’s insistence that Baghdad pay debts amassed during the development of the local oil transport infrastructure.
Once the issues are settled between the central Iraqi government and the autonomous KRG in Erbil, Baghdad plans to start building a new pipeline from the Kirkuk area to Ceyhan. Baghdad claims it has already received 96 offers for the construction of the pipeline.
For months, Iraq and Iran have been considering the launch of the oil swap deal, which would initially run for one year. The time period can be additionally renegotiated, Iraq’s Oil Minister Jabbar Al-Luiabi said in early December.
The deal envisages the swap of up to 60,000 bpd of crude oil, with the Iraqi oil coming from the Kirkuk field in northern Iraq, which until recently was under the effective control of the Iraqi Kurds.
After the Iraqi offense against Kurdistan following an independence referendum that Baghdad rejected, the central government resumed control of the Kirkuk field as well as others previously held by the Kurds, but no oil flowed.
Plans have been that Baghdad will transport between 30,000 and 60,000 bpd of Kirkuk crude by tanker trucks to the border with Iran, at Kermanshah. In exchange, Iran will supply the same amount of similar-grade crude to Iraq’s southern ports.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.