Iraqi Kurdistan Oil Export Restart Still A Way Off

By Julianne Geiger - Feb 16, 2024, 

There is no forecasted date for when oil exports from Iraq’s semi-autonomous Kurdistan region to Turkey will resume, a Patriotic Union of Kurdistan (PUK) leader said on Friday.

On the sidelines of the Munich Security Conference on Friday, Bafel Talabini told Argus that the relationship between Baghdad and Erbil was a “very delicate” one, and one wrong negotiating move could upend the entire process of restarting pipeline exports to Turkey.

For months, the pipeline between the two countries has been out of commission since March 2023, after a squabble between the Iraqi government, the Kurdistan Regional Government (KRG), and Turkey over KRG crude that had been making its way to Turkey via pipeline. The International Chamber of Commerce decided in March that Turkey could only purchase oil from Iraq through Iraq’s State Organization for Marketing of Oil (SOMO) and that it must pay Iraq $1.47 billion in compensation for oil exports between 2014 and 2018, when it didn’t have official Iraqi permission to purchase oil directly from the KRG.

Turkey balked at the ruling and sent Baghdad additional conditions that would need to be met before exports would resume—conditions that Iraq wasn’t interested in meeting. And with oil flows via pipeline between KRG and Turkey halted, an apparent stalemate ensued and continues today.

The groups from time to time hint that a new deal for resumption is imminent, but the last few updates on the subject from the parties involved suggest that a deal is still not near.

So while the pipeline is physically ready to resume operations, the spatting parties are anything but—and the international oil companies currently operating in KRG are getting ancy and have been putting pressure on the U.S. government to hurry a deal along.

By Julianne Geiger for Oilprice.com