Iraq Signals Readiness to Restart Oil Exports Through Turkish Pipeline

Iraq’s oil ministry is prepared to resume oil exports from Kurdistan to Turkey, yet ongoing disputes with the Kurdish government are unresolved. A recent budget amendment permits higher fees for oil production, which may help address outstanding issues. Both Iraq and Turkey have expressed readiness to restart the pipeline operations, but technical and financial negotiations remain a barrier.

The Iraqi oil ministry reiterated its readiness to resume crude exports from the Kurdistan region through a pipeline to Turkey that has remained non-operational for nearly two years. Despite both Iraq and Turkey signaling openness to restart oil shipments, ongoing disputes between the Kurdistan Regional Government and the central government in Baghdad have yet to be resolved.

Baghdad has requested Kurdish authorities to begin supplying oil to the State Oil Marketing Organization (SOMO) to facilitate exports, adhering to the budget law and its amendments, along with complying with OPEC production limits. However, specific dates for the resumption of exports have not been disclosed.

In response, Kurdish officials indicated that they have not received consent from the central government concerning the allocation of oil for domestic usage and the financial arrangements for production and transport enterprises. This impasse could complicate Baghdad’s compliance with OPEC+ mandated output reductions, particularly as it has previously struggled to meet these commitments.

The pipeline saga commenced in March 2023, when Turkey halted operations following an arbitration ruling mandating a payment of $1.5 billion to Iraq. Turkey later stated that the halt was due to repairs required after two significant earthquakes, but has indicated readiness to restore operations pending Iraq’s initiation of oil flows.

Furthermore, Iraq’s parliament has recently passed a budget amendment that allows for a raised payout of $16 per barrel for oil production and transportation, representing a potential step toward breaking the ongoing deadlock regarding oil exports.

In summary, Iraq’s oil ministry is poised to restart exports via a Turkish pipeline, yet contentious issues between the Kurdistan region and the central government remain unresolved. Both parties express willingness to resume operations, but technical and financial disputes continue to hinder progress. The amendment of the budget to increase operational fees marks a tentative advancement towards resolving these disputes and recommencing shipments.

Original Source: www.energyconnects.com