Iraq halts Kirkuk oil to Iran for domestic reasons, won’t use KRG pipeline

ERBIL, Kurdistan Region — Iraq will halt exports of Kirkuk’s oil to Iran temporarily and will instead use it for domestic consumption, but won’t utilize the pipeline already running through the Kurdistan Region.

Aasim al-Jihad, spokesperson to Iraq’s Ministry of Oil, explained on Sunday the 30,000 bpd that Baghdad exports via tanker truck to Iran will be halted temporarily.

“Due to the small amount of production reaching just 30,000 barrels, it has been decided that in the temporary this amount will be halted from being exported to Iran so as to use for domestic consumption,” said Jihad.

The exports repeatedly have been and restarted due to different reasons, said Jihad, claiming it has nothing to do with US sanctions against Iraq’s largest trading partner.

The US’s toughest sanctions aimed at Iran’s oil exports will come into effect on Monday. The Trump administration, to offset Iran’s global oil supply and to prevent a shock to global markets has reportedly pressured allies including Iraq to increase oil exports.

One of those areas where Iraq could hike its exports is in Kirkuk. It is capable of exporting more than 300,000 bopd via a pipeline that runs through the Kurdistan Region, into Turkey, and terminates at the Turkish port of Ceyhan.

“So far no final decision with regards to increasing the production rates of Kirkuk’s oil has been made, and no agreement for the mechanism of exporting Kirkuk’s oil through using the pipeline network for export of Kurdistan Region’s to the Ceyhan port or dealing with the matter in another form has been reached,” Jihad added.

Reportedly, Iraq has told Washington that it will transfer Kirkuk’s oil to its refineries to use it to meet domestic consumption and doesn’t wish to export it through the Ceyhan pipeline.

Prior to October 16th, more than 280,000 barrels bopd were exported from Bay Hassan and Havana oil fields of Kirkuk through KRG’s pipeline. Kirkuk’s other fields produced around 100,000 bopd.

Through the ISIS conflict, the Kurdistan Region’s Peshmerga secured oil facilities in disputed Kirkuk. They were handed back to Iraq after a federal incursion in October 2017.

The Kurdistan Regional Government claims the loss of Kirkuk has reduced its oil revenues by half. 

Iraq’s Council of Ministers has submitted a draft budget for Fiscal Year 2019 to parliament. Some Kurdistani MPs argue the bill is contentious and does not adequately address oil, Kirkuk’s status, and the Region’s share of the federal budget.