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Deal for Iraq oil via Turkish pipeline coming ‘soon’

By Eva Levesque
Iraq oil pipeline The Iraq-Turkey pipeline has been an essential source of revenue for the semi-autonomous Kurdistan region Reuters
The Iraq-Turkey pipeline has been an essential source of revenue for the semi-autonomous Kurdistan region
  • Agreement ‘in a few days’
  • Exports stopped for a year
  • Oil companies welcome move

A deal is expected soon for Iraq to resume oil exports via a pipeline to the Turkish port of Ceyhan on the Mediterranean coast.

The Iraqi oil ministry, Kurdistan’s Ministry of Natural Resources and international oil companies met on Sunday in Baghdad to discuss resuming production and exports, said Iraq’s oil minister, Hayan Abdul Ghani.

“We have made progress in today’s talks, and we expect to reach an understanding in a few days,” Abdul Ghani told the state-owned Iraqiya TV on Sunday.

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Iraq is Opec’s second-largest crude producer.

International oil companies operating in Iraq’s Kurdish region said in May that they were willing to negotiate terms to restart exports that have been stopped for more than a year.

The Association of the Petroleum Industry of Kurdistan (Apikur) welcomed the formation of committees in Baghdad and Erbil, capital of the Kurdistan Regional Government, that were announced by the Iraqi oil minister to restore oil exports through the pipeline.

Myles B Caggins, an Apikur spokesman, told AGBI in May: “We are awaiting official notification of international oil companies’ role in these critical negotiations.” 

Apikur’s members are responsible for around half of the oil supplied to the Kurdistan Regional Government.

They include Genel Energy, which has a registered office in Jersey and a field office in Turkey; Gulf Keystone Petroleum, which is listed on the London Stock Exchange; HKN Energy, which has its headquarters in Dallas, Texas; DNO of Norway; and ShaMaran Petroleum of Canada.

The Iraq-Turkey pipeline has been an essential source of revenue for the semi-autonomous Kurdistan region and supplies sour crude for refineries in the Mediterranean market.

Commercial dispute

It once transported around 400,000 barrels per day from the Kurdistan region and another 75,000 barrels per day from fields in Kirkuk.

International producers were forced to cut output after a commercial dispute between Baghdad and Turkey.

They refused to restart exports through the pipeline over another payment dispute with Baghdad and Erbil.

The latest talks are expected to focus on the Kurdistan Regional Government’s production-sharing energy contracts, which Baghdad wants to amend.

The foreign oil companies also want to be paid higher production costs than they receive at present for oil produced in the Kurdistan region.

Apikur said its members were prepared to resume exports, if they were provided with payment surety for past and future exports, direct payment and the preservation of commercial terms.

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