Sulaimaniya, Iraq — Exporting Kirkuk oil through Turkey is the top item on the long-standing and acrimonious agenda with the federal government, the prime minister of Iraq's semi-autonomous Kurdistan region has said.
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More than 200,000 b/d of crude from the Kirkuk area, managed by the state-run North Oil Company, is shut in due to a lack of export outlet. Another 230,000 b/d is sent to local refineries and a refinery and power plant in Baghdad.
"We offered to help export Kirkuk's oil through Turkey," Nechirvan Barzani told a press conference covered by local television Tuesday. "This is the main oil-related issue that we are discussing now."
Kurdistan built a pipeline in 2013 that connects to the Turkish side of the Iraq-Turkey Pipeline, and has been exporting crude produced by the Kurdistan Regional Government's contracts since 2014.
It remains the sole practical export outlet of northern Iraq crude, as the Iraqi leg of the Iraq-Turkey Pipeline was destroyed by insurgents in early 2014.
Kurdistan fields are exporting 350,000 b/d, industry sources told S&P Global Platts, about half the existing capacity of the pipeline.
Kurdistan and the federal government have long been in dispute over the rights to sign oil contracts with international oil companies and to export oil. The disputes are the premise of an ongoing legal battle in the Iraqi federal court.
Kurdistan's subsequent export via the Iraq-Turkey Pipeline is being contested by Baghdad in an International Chamber of Commerce's Paris arbitration case against Turkey.
Negotiations, however, have been strained by numerous factors over the past year. Most recently, the disputed May 12 national elections have yet to produce a clear winner and leading electoral blocs are balancing a need to obtain support from the Kurdistan delegation while also showing a hard line against the Kurds so as not to jeopardize their nationalist credentials.
On Oct. 16, 2017, the federal government retook some disputed fields in Kirkuk, which Kurdistan had been operating since mid 2014. A month earlier, Kurdistan held an independence referendum that Baghdad warned would elicit a harsh response.
In early 2017, Rosneft signed the first of a number of deals with Kurdistan, buying oil that Baghdad said is akin to smuggling, signing production sharing contracts that Baghdad said are illegitimate, and purchasing a 60% stake in the Kurdistan export pipeline.
Baghdad has given mixed responses to the Rosneft deal. Various senior officials have reiterated the federal government's hegemony over the oil sector, but have not come close to threatening Rosneft as it has other oil companies that have signed upstream or oil purchase deals with Kurdistan.
"We don't have any disagreement with Baghdad over Rosneft oil deals," Barzani told the press conference. "We are looking for a constitutional solution for all oil related issues."
--Edited by Jeremy Lovell, firstname.lastname@example.org