Iraq to Resume Oil Exports to Turkey

ERBIL, Kurdistan Region – Iraq will resume crude exports through a pipeline to Turkey within days, the Iraqi oil minister said, as Erbil and Baghdad try to resolve a serious dispute over energy exports.

"We are trying to resolve these problems. I believe the flow will resume within a week," Abdul Kareem Luaibi announced at the Turkish International Oil and Gas conference in Ankara.

Energy experts say that in early March Iraq stopped exports through its Kirkuk-Ceyhan pipeline, which has suffered many insurgent attacks and technical problems and is frequently under repair.

Last month, Turkey also stopped the flow from Kurdistan through the one operational Kurdish pipeline, following objections by Baghdad, which has consistently opposed direct oil sales by the autonomous Kurds.

The Kurds began exporting their own oil to Turkey early this year, before hitting a brick wall with Baghdad. Erbil wants to manage the exports and revenues itself, but the central government insists it must be in charge.

In order to pressure Erbil, Baghdad cut off payments from the national budget, placing a serious strain on the Kurdistan Regional Government’s (KRG) ability to pay the salaries of civil servants for two months.

Ankara has said it prefers to win Baghdad’s approval before the separate Kurdish oil exports can resume, and the KRG said last month it would inject 100,000 bpd into the pipeline controlled by the central government, as a goodwill gesture to resolve the row with Baghdad.

US mediators have for weeks been trying to bring the parties closer together.

Turkey is interested in Kurdish oil to help diversify energy supplies from Russia and Iran and reduce a burgeoning $60 billion energy bill.

Because of the stoppage from Kirkuk, the overall oil output of the world oil producing organization OPEC fell in March to its lowest since December.

Luaibi announced in Ankara that Baghdad wants to boost its exports to Ceyhan by building a second pipeline; that would be seemingly next to the pipeline the northern Kurds are also constructing into Turkey.

"I believe the daily oil flow will exceed 1 million barrels a day when that line is completed. I hope it happens this year,”Luaibi said in Ankara, referring to the pipeline that Baghdad is constructing.

In addition, Iraq is working on retaining income from its big gas reserves, also partly located in the Kurdistan Region. “We aim to develop a natural gas system that includes Egypt, Jordan, Iraq, Lebanon Turkey and Syria,” the Iraqi oil minister announced.

Iraq is now rebuilding its energy industry after decades of war and economic sanctions. It is planning to increase its oil production to 9 million barrels a day, a 35-year high. It is OPEC’s second-biggest producer and has the world’s fifth-largest oil reserves.

But as Iraq rushes to supply more oil to Asian economies, there have been complaints from some buyers about the quality of its crude. Since December, three Asian buyers have complained about high water content in Iraq’s Basra Light crude.