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Iraq Asks Turkey To Resume Oil Flows

Iraq has officially requested that Turkey restart the pipeline responsible for sending Iraqi crude oil from the semi-autonomous Kurdistan Region to the port of Ceyhan, a statement from Iraq’s Kurdistan Regional Government said on Thursday.

Oil flows along the pipeline have been halted for weeks.

“Both the Kurdistan Region’s Ministry of Natural Resources and Iraq’s Ministry of Oil are reportedly waiting for Turkey’s response before resuming oil exports,” the KRG statement said.

Iraq’s oil minister said last week that Baghdad and Erbil were set to reach an agreement over crude oil exports from the semi-autonomous Kurdistan Region within the next two weeks. “Regarding the agreement with the Region, we have reached the final stage and hopefully we will reach the final agreement on the exportation of crude oil within a maximum of two weeks,” Iraq’s oil minister Hayan Abdul Ghani said at the time. The only outstanding issue was how Iraq would handle the bank account where Erbil’s oil money is kept.

Kurdistan’s crude oil exports – around 400,000 to 450,000 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.

The court ruled that Turkey should pay Iraq compensation of $1.5 billion for what now appears to be illegal exports of oil over five years. Turkey then shut off the Kirkuk-Ceyhan pipeline in response, which suspended the flow of oil from the Kurdistan region. Kurdistan’s oilfields also shut down due to a lack of storage.

The negotiations between Baghdad and Erbil are focused on who gets more control over the oil flows, with the latest iteration of talks settling on export revenues being deposited into an existing KRG bank account with Citi in the UAE, three Reuters sources close to the matter said. Baghdad will have auditing access.

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By Julianne Geiger for Oilprice.com

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