Oil firm starts shutdown in Kurdistan Region amid pipeline closure
ERBIL, Kurdistan Region - A major oil firm said on Wednesday that it is cutting production at its oil fields in the Kurdistan Region as the legal dispute between Iraq and Turkey continues.
Turkey closed a key pipeline pumping oil from the Kurdistan Region to its port of Ceyhan in the Mediterranean last week after a ruling by the International Chamber of Commerce (ICC).
Norwegian oil and gas operator DNO announced in a statement that it began an “orderly shutdown” of its operated oil fields in the Kurdistan Region four days after receiving instructions to temporarily halt oil deliveries to Turkey’s Ceyhan port.
“It is unfortunate it has come to this given the likely impact of a continuing supply disruption on oil prices and at a fragile time in global financial markets,” said DNO’s Executive Chairman Bijan Mossavar-Rahmani.
The Ceyhan port pipeline carried close to 400,000 barrels per day of Kurdistan oil and another 70,000 Iraqi oil to be exported to the Mediterranean and other refineries prior to the halt.
DNO produced an average of 107.000 barrels per day in 2022 in Tawke and Peshkabir oilfields, which amounts to nearly a quarter of the Kurdistan Region’s total exports, it said.
The statement added that production at Peshkabir was halted on Tuesday evening, while production at Tawke has been initiated and will take over a day to be completed.
DNO previously announced it had diverted oil production to its production storage, but its capacity is limited.
The arbitration court ruled that Ankara had breached a 1973 pipeline agreement between Iraq and Turkey that obliges the Turkish government to abide by instructions issued by Iraq regarding the transport of crude oil exported from Iraq. Oil exports from the Kurdistan Region were halted on Friday and are yet to resume.
The Kurdistan Regional Government (KRG) is heavily reliant on its revenues and an inability to sell its crude will severely impact its already struggling economy.
The KRG has sent several delegations to Baghdad for discussions since the ruling. Iraq maintains that it is in favor of oil exports resuming but insists that Baghdad remains in control of the oil flow from the Kurdistan Region.
“We fully support the export of the Kurdistan Region’s oil abroad and we should hurry to reach an agreement for the oil to be exported,” Assim Jihad, spokesperson for the Iraqi oil ministry, told Rudaw’s Sangar Abdulrahman on Tuesday.
By Azhi Rasul