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Iraq set to reopen pipeline as Kurdish talks stall

April 8, 2024 at 10:36 am

A picture shows export oil pipelines at an oil facility on February 23, 2016 [STR/AFP via Getty Images]

Iraq is repairing a pipeline that could allow it to send 350,000 barrels of oil per day (bpd) to Turkiye by the end of the month, Reuters has reported. The move is likely to rile foreign oil companies and the Kurdistan Regional Government (KRG).

The reopening of the Kirkuk-Ceyhan pipeline, which has been closed for a decade, will provide a rival route to a pipeline from the Kurdistan region that has been shut for a year, just as talks between Baghdad and the KRG on resuming exports have stalled. Iraq deems production-sharing agreements between the Kurds and foreign companies using the KRG’s pipeline to be illegal.

The federal government in Baghdad will require oil companies to negotiate with it to sell their oil via the revived pipeline to Turkiye, potentially angering the Kurds who rely almost entirely on oil revenue. Exports via the 960 km pipeline were halted in 2014 after repeated attacks by Daesh militants. It once handled about 0.5 per cent of global supply.

“Repair works are ongoing and a major crude pumping station with storage facilities has been completed,” explained Iraqi deputy oil minister for upstream affairs Basim Mohammed. “The pipeline is likely to be operational and ready to restart flows by the end of this month.”

Repairing damaged sections inside Iraq and completing the pumping station will be the first stage of operations to bring the pipeline back to full capacity, he added.

Exports through the KRG pipeline were halted on 25 March last year after an arbitration court ruled that they violated provisions of a 1973 treaty by facilitating oil exports from the semi-autonomous Kurdish region without Baghdad’s consent. Negotiations to restart it have faltered as Turkiye, the KRG and the federal government have made conflicting demands.

Two Iraqi oil officials and a government energy adviser, speaking on condition of anonymity, said that Baghdad had balked at a Kurdish demand that the federal government pay a $6 per barrel transit fee to Russian oil company Rosneft which has part-ownership of the pipeline.

“Iraqi oil ministry officials told the Kurdish negotiating team that they consider the agreement between KRG and Rosneft illegal and a violation of valid Iraqi laws,” said Kurdistan region-based energy adviser Bahjat Ahmed, who was briefed about the talks.

A KRG spokesman did not reply to Reuters requests for comment.

Despite tensions between the Kurds and Baghdad, the two sides need each other. Kurdish parties have helped Iraqi politicians to come to power and Baghdad has contributed to the salaries of Kurdish civil servants and fighters. KRG exports flow through a KRG pipeline to Fish-Khabur on the northern Iraqi border, where the oil enters Turkiye and is pumped to the port of Ceyhan on the Mediterranean coast.

Three sources from the state-run North Oil Company (NOC) said that test pumping of crude oil started early last week to check the parts of the pipeline that run inside Iraqi territories. The tests found leaks in some segments. Iraqi NOC technical crews have speeded up repair operations to fix the damaged sections that run from Kirkuk through the provinces of Salahuddin and Mosul to the Turkish border area.

The agreement between Baghdad and Ankara covering Iraq-Turkiye oil pipeline operations was extended in 2010 and will expire in mid-2025. The resumption of operations of the old pipeline will be discussed as part of talks to extend the agreement, noted the government energy adviser.

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