Iraq And Turkey Yet To Reach Deal On Restarting Kurdistan Oil Exports

Iraq and Turkey have not reached an agreement yet on the resumption of crude oil exports out of the semi-autonomous Iraqi region of Kurdistan from the Turkish port of Ceyhan, Iraq’s Oil Minister Ihsan Abdul Jabbar Ismaael was quoted as saying on Wednesday.  

Kurdistan’s exports of crude oil have been shut for more than a month now, weeks after the federal government of Iraq and the region of Kurdistan reached an agreement in early April to resume exports via an Iraq-Turkey pipeline and the port of Ceyhan on the Mediterranean.

The fate of the exports now lies in negotiations between Iraq and Turkey on payments and a second arbitration case between the two countries over the exports from Kurdistan.

Oil flows from Kurdistan were stopped at the end of March, forcing companies to either curtail or suspend production because of limited capacity at storage tanks.

Kurdistan’s crude oil exports – around 400,000 bpd shipped through an Iraqi-Turkey pipeline to Ceyhan and then on tankers to the international markets – were halted in late March by the federal government of Iraq.

A few days earlier, the International Chamber of Commerce ruled in favor of Iraq against Turkey in a dispute over crude flows from Kurdistan. Iraq argued that Turkey shouldn’t allow Kurdish oil exports via the Iraq-Turkey pipeline and Ceyhan without approval from the federal government of Iraq.

Now that an agreement between Iraq and Kurdistan is in place for the resumption of exports, Iraq is awaiting a response from Turkey.

Pipeline operators have not yet received instructions to resume flows and most of Kurdistan’s large oilfields remain shut in.

London-listed Gulf Keystone Petroleum, Norway-based DNO ASA, and Canada-based Forza Petroleum suspended output at their operated fields in Kurdistan in early April and have yet to announce the resumption of production.

Gulf Keystone said in an operational update last week that it “continues to believe that the suspension of exports will be temporary and is ready to resume production immediately, although no official timeline to restart pipeline operations has been publicly announced by the Kurdistan Regional Government.”

By Charles Kennedy for Oilprice.com

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