Kurdistan-Iran pipeline deal likely to be reached in July

ERBIL, Kurdistan Region—A top Kurdish delegation is due to visit Tehran in July to sign an expected agreement on construction of a pipeline that will carry Kurdish oil to the Persian Gulf where it will be available for international buyers.

Kurdistan Regional Government (KRG) representative in Tehran, Nazim Dabbagh, told Rudaw “an understanding” was due to be signed between the Iranian oil ministry and its counterpart in the Kurdistan Region shortly after their April meeting.

Though there is no deadline to the sign the final agreement, a high-level delegation from the KRG will visit Tehran after Ramadan to follow up on the deal and it is expect to be signed by then, according to Taha Zangana, deputy minister at the Ministry of Natural Resources.

“Both sides made progress in terms of discussing the technical side of the pipeline. But what remains is the political and commercial aspects of the deal,” Zangana told Al-Jazeera.

The pipeline deal may include an agreement on natural gas as well.

Dabbagh said the agreement is “beneficial” for both Erbil and Tehran as it will provide Kurdistan with a second pipeline that is planned to initially export over 250,000 barrels per day (bpd).

“Around 400 to 500 tankers are already shipping Kurdish oil to Iran every day. If this volume is exported through a pipeline, the revenues from it will be much more transparent while also reducing the impact the heavy oil tankers are having on the roads,” Dabbagh told Rudaw.

Iranian officials announced earlier this year that Tehran had offered the KRG access to the Persian Gulf for export of its crude oil after a series of disruptions halted the shipment of Kurdish oil to Turkey’s Ceyhan port on the Mediterranean coast.

The Kurdistan Region has an estimated 45 billion barrels of crude oil reserves, which it administrates largely independent from Baghdad.

The region is currently exporting around 600,000 bpd to the Turkish Ceyhan port but has said it could increase production to over 1 million bpd during 2016.

“[The] Iranian market is closer to us, which will reduce the overall expenses for the shipment while also lifting the price of our oil,” Dabbagh said.

A primary reason for building the second pipeline is to have an alternative in case the KRG loses access to its export route through Turkey.

“In case of any conflict with Turkey, whether military or political, Kurdistan will manage if it has access to a second export route,” an Iraqi Kurdish MP in Baghdad told Rudaw in May. “Kurdistan should not depend solely on Turkey for its oil export,” he added.

Starting next year, Erbil also looks to become a major exporter of natural gas to Turkey.

The Kurdistan Region has an estimated 45 billion barrels of crude oil reserves, which it administers largely independently of Baghdad.

There are also between 10 to 20 billion barrels of oil outside the Kurdistan Region in the so-called disputed territories that are predominantly Kurdish. Since 2014, these territories have been patrolled by the KRG’s Peshmerga forces, including oil wells in Kirkuk and several fields in the Nineveh Plains.

The KRG will need to get approval from Baghdad on the pipeline to Iran, but since Iran enjoys good relations with Iraq, it is expected that Baghdad will not resist it.

“Iraq will have no problem with the project if the oil from Kirkuk is also sent to Iran through that pipeline,” Dabbagh said in May.

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