Iraq's KRG, Baghdad team to inspect pipeline before resuming exports through Turkey

Iraq's Kurdistan Regional Government and the federal oil ministry have formed a technical team to inspect the Iraq-Turkey pipeline used to export Kurdish oil as both sides appear to be moving closer to resume flows through the pipeline shut for almost two years.

The two sides have agreed to resume the export of Kurdistan's oil based on the available quantity, according to a Feb. 23 statement from the KRG's ministry of natural resources. An estimate of when exports would resume was not stated. The closure of the pipeline has kept some 400,000 b/d of Kurdish crude from the Mediterranean market since March 2023.

On Feb. 22, the oil ministry said all conditions were met to resume crude oil exports through the Ceyhan port in Turkey. The ministry called on the KRG to hand over the oil to the state marketing agency SOMO, according to a Feb. 22 statement published by the official Iraqi News Agency. International oil companies operating in the northern region said they are ready to resume exports if their agreed-to terms are met.

The statements came one day after Platts and other news organizations reported that the US had ordered Iraq to resume exporting Kurdish crude through a pipeline to Turkey's Ceyhan terminal or face the threat of sanctions, citing sources. Iraq slipped to fifth-largest crude oil exporter last year, averaging 3.4 million b/d and behind Saudi Arabia, Russia, the US and the UAE, according to S&P Global Commodities at Sea. In 2023, it was fourth-largest ahead of the UAE.

A budget amendment passed by Iraqi lawmakers earlier this month stated $16/b as the price that would be paid by the federal finance ministry to the KRG for oil produced in the northern region, but issues remained such as unresolved debt payments to international oil companies and the need for clear payment guarantees. The Kurdish government has racked up extensive debt owed to international oil companies over the last few years.

"We seek written sales and lifting agreements, with the government of Iraq and Kurdistan Regional Government, that provide payment transparency and surety without political interference," the Association of the Petroleum Industry of Kurdistan said in a Feb. 22 statement. Members have previously stated they are ready to resume exports "after agreements are reached that uphold our member companies existing contractual, commercial and economic terms," it said. The association represents the majority of international oil companies in Kurdistan.

The Iraq-Turkey pipeline went offline after an arbitration court in Paris said Turkey had violated the pipeline agreement by allowing independent Kurdish sales.