ERBIL, Kurdistan Region - The United States on Monday said it had urged Ankara and Baghdad to allow the resumption of Kurdistan Region’s exportation of oil through Turkey, a US State Department spokesperson told Rudaw.
The Paris-based International Chamber of Commerce (ICC) arbitration court ruled on Thursday that Turkey 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. In 2014, the Kurdistan Regional Government (KRG) began using the pipeline to send its crude to Turkey’s Ceyhan port, to the ire of Baghdad.
Following the decision, Turkey informed Iraq that Ankara would no longer allow KRG crude to be loaded onto ships at Ceyhan port without permission from Baghdad.
Vedant Patel, US State Department Principal Deputy Spokesperson, told Rudaw’s Diyar Kurda during a press briefing late Monday that Washington has “urged the governments of Turkey and Iraq to resume the flow of oil through the Iraq-Turkey pipeline, and disruptions to global energy supply would not serve anyone’s interest.”
“We also understand that the Kurdistan Regional Government is in discussion with the government of Iraq to find a mutual, acceptable path forward on related budget and hydrocarbon issues as was discussed during the February US-Iraq Higher Coordinating Committee in Washington,” he added.
The spokesperson also said that the US continues to urge Erbil and Baghdad to resolve their budget and hydrocarbon issues.
Under the ICC court ruling, the Iraqi government, via the State Oil Marketing Organization (SOMO), is the only party in charge of the management of export operations through Turkey’s Ceyhan port related to Iraqi oil, according to a statement from Iraq’s Ministry of Oil on Saturday.
A delegation visited Baghdad following the ruling but the outcome of the discussions remains unclear.
Reacting to the verdict, the KRG’s Ministry of Natural Resources said it will not affect ongoing talks with the federal government, adding that they have reached a preliminary agreement on budget, oil and gas issues and will continue to pursue the matter until a constitutional solution is reached.
The Kurdish government is heavily reliant on its revenues and an inability to sell its crude will severely impact its already struggling economy. The government has failed for years to pay its over a million civil servants on time and in full.
The production of around 450,000 barrels of oil per day in the Kurdistan Region has been jeopardized as a halt in exports has forced international oil companies (IOCs) operating in the region to store produce rather than allow it to flow to the pipeline – an inadequate measure as storage capacity is limited.
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