Iraq restarts Kurdish oil exports to Turkey following a two-and-a-half-year suspension.
Iraq has successfully resumed crude oil exports from the semi-autonomous Kurdistan region to Turkiye, marking a significant development following a prolonged hiatus that lasted two and a half years. This reinstatement comes as part of an interim agreement aimed at resolving ongoing legal and technical disputes between Iraq’s federal government and the Kurdistan regional government (KRG), as well as foreign oil producers active in the region.
The resumption of oil transits commenced early in the day, as confirmed by Iraq’s oil ministry. Initial reports indicate that operations have progressed without major technical challenges. Turkish Energy Minister Alparslan Bayraktar also acknowledged the restart in a communication on social media platform X.
Under the terms of the newly established agreement, crude transportation is set to reach levels between 180,000 to 190,000 barrels per day (bpd) to Turkiye’s Ceyhan port. This triumvirate agreement between Iraq’s oil ministry, the KRG’s natural resources sector, and international oil companies was finalized earlier in the week, paving the way for a return of substantial oil flows into global markets.
The United States played a facilitating role in advocating for this resumption, which is anticipated to eventually allow for pumping as much as 230,000 bpd back into international markets. This comes at a pivotal time, as the Organization of the Petroleum Exporting Countries (OPEC) is actively expanding its output to capture a larger share of the global market. US Secretary of State Marco Rubio welcomed the agreement, suggesting it would yield concrete benefits for both the American and Iraqi economies.
Iraq’s delegate to OPEC, Mohammed al-Najjar, emphasized the nation’s capacity for increased oil exports following this arrangement via the Kirkuk-Ceyhan pipeline, alongside other initiatives directed at the Basra port. This development highlights the rights of OPEC member states to advocate for enhanced production capabilities, especially when new projects facilitate an increase in output.
As part of the deal, companies in the Kurdistan region are slated to receive per barrel to address their production and transportation expenditures. The eight oil-producing organizations that are part of this agreement, alongside Kurdish authorities, intend to convene within a month of the resumption to establish a framework for addressing an outstanding debt of billion owed by the Kurdistan region to those firms.
Historically, the management of oil exports has been a central point of contention between Baghdad and Erbil. However, this agreement is viewed as a pivotal step toward enhancing Iraq’s oil revenues and fostering a more cooperative relationship between the central government and the Kurdish region. The Kirkuk-Ceyhan pipeline had previously been suspended in March 2023 due to a ruling from the International Chamber of Commerce requiring Turkiye to compensate Iraq for unauthorized exports made by Kurdish authorities. The total losses incurred by Iraq prior to the agreement have been estimated at over billion according to the Association of the Petroleum Industry of Kurdistan.
This landmark deal not only promises to rejuvenate Iraq’s oil sector but also serves as a potential foundation for future collaboration between the federal government and regional authorities, fostering stability and economic growth.
#BusinessNews #MiddleEastNews
