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ECONOMY
Turkish Energy and Natural Resources Minister Fatih Donmez speaking to AKP lawmakers on March 29, 2023. Photo: AA
ERBIL, Kurdistan Region - Turkey’s energy minister on Wednesday denied reports that Ankara has been fined by an arbitration court in Paris for failing to comply with an oil exportation deal with Iraq.
The International Chamber of Commerce (ICC) arbitration court ruled on Thursday that Turkey had breached a 1973 pipeline agreement that obliges the Turkish government to abide by instructions issued by Iraq regarding the transport of crude oil exported from Iraq. Iraq welcomed the ruling, claiming to be triumphant.
As per the ruling, Turkey has to pay Iraq about $1.5 billion in compensation for allowing the boarding of Kurdistan Region’s oil onto ships at Ceyhan power without Baghdad’s permission, reported Reuters.
"There is no fine. There is a large comprehensive report and there are some sanctions related to it. There are no unilateral sanctions. Four out of five issues claimed by it [Iraq] were rejected, one was accepted," Turkish Energy and Natural Resources Minister Fatih Donmez said on Wednesday.
"We had our claims and demands. Out of six demands, five were accepted and one was rejected. Based on this, the sanctions are now being evaluated by our friends, lawyers. We have an agreement already in place with the Iraqi government,” he added.
Turkey’s Ministry of Energy and Natural Resources said in a statement late Tuesday that Iraq had violated the agreement and should pay Ankara compensations.
In 2014, the Kurdistan Regional Government (KRG) began using the pipeline to send its crude oil to Turkey’s Ceyhan port, despite opposition from Baghdad. The ICC ruling sees the boarding of the KRG’s oil in Turkey as a violation of the 1973 agreement. 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.
The process of oil exportation from the Kurdistan Region was halted on Friday and is yet to be resumed.
Donmez said that his country intends to “play a constructive role. A little more time will tell."
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. Norwegian oil and gas operator DNO announced on Wednesday that it is cutting production.
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