Kurdistan Oil Flow to Turkey Begins, Exports Await Iraqi Consent

Crude oil from Iraqi Kurdistan has started flowing via a new pipeline to the Turkish Mediterranean export hub of Ceyhan but will not be shipped to world markets without the consent of Baghdad, Turkish Energy Minister Taner Yildiz said on Thursday.

Yildiz hopes a deal can be reached this month for exports to begin, he told a news conference in Ankara.

Flows through the pipeline would start at 300,000 barrels per day (bpd) and rise to 400,000, he said.

Turkey signed a multi-billion-dollar energy package late last year with Iraqi Kurdistan (KRG) under which the semi-autonomous region plans independent energy exports via Turkey.

Kurdistan could eventually export some 2 million bpd of oil to world markets and at least 10 billion cubic metres per year of gas to Turkey.

Its bid to export oil and gas independently from Baghdad has infuriated officials in the Iraqi capital, which claims sole authority to manage Iraqi oil.

Turkey has been working to get the central government on board before exports start.

“The flow of crude oil from Iraq has begun. It is being stored. It will not be exported without the consent of the Iraqi government,” Yildiz told the news conference.

The Turkish-KRG deal has significance for major oil companies as well as for the Kurds and Turkey, which stand to benefit from domestic supply and onward westward export through Ceyhan.

Kurdistan has struck deals with ExxonMobil, Chevron and Total among others as it seeks to develop its energy industry.

Ankara has set up the Turkish Energy Company (TEC), a state-backed entity which has struck partnership deals with Exxon and will be Turkey’s counterparty in dealings with Kurdistan.

Yildiz visited Baghdad in December for talks with Iraq’s Deputy Prime Minister Hussain al-Shahristani, who has long opposed Turkey’s courtship of the Kurdish region.

Baghdad says Kurdish efforts towards oil independence could lead to the break-up of Iraq, but Turkey has repeatedly said it respects Iraq’s sensitivities over territorial integrity and that increasing oil revenues will help the whole of the country.

RIGZONE

2 Comments on "Kurdistan Oil Flow to Turkey Begins, Exports Await Iraqi Consent"

Arthur on Fri, 3rd Jan 2014 9:48 am 



The decades old hostility between the Kurds and the Turks is gone. Reason: khalif-in-waiting and would-be guardian of Sunni Islam Erdogan is no longer interested in Turkish nationalism. The Kurds smell they can have autonomy within an Islamic sort of EU. The Sunni Kurds now give the finger to Shi’ite run Bagdad, which, thanks to the ‘geniuses’ of Clean Break, has become a client of the capital of the rising Shi’ite empire Tehran. The fear in Bagdad about a potential break-up of Iraq is very realistic.

rockman on Fri, 3rd Jan 2014 5:52 pm 



Here’s a convoluted “what if”. First, Turkey says they won’t export the Kurd oil. But does that also mean they won’t use it themselves? Interesting that Turkey currently imports about as much oil as the Kurds are shipping them. And more interesting is that Iran had been the source of half of Turkey’s imports.

What if the Turks feel thy can’t buy the Kurd oil and keep nice with Baghdad? So then consider a common method used around the world – the paper swap: Iran takes title of the Kurd oil and sells it to Turkey. The Kurds get an equivalent amount of Iranian oil. And then the Kurds sell that Iranian oil to Iran or some other buyer…like China. Sounds convoluted but a rather standards method to save on transports costs. This is how the US once sold N Slope oil to Japan even though it was illegal for us to sell that oil to Japan. So we didn’t “sell” the oil to them: they bought contracts from other US oil importers, such as México or Venezuela. A Japanese refinery would swap it’s contract for such oil with a Texas refinery that had contracts for the N. Slope oil. Works for both sides: saves a lot of transport cost.

Of course, the Kurd/Iraq/Iran politics are much more complicated. Why would Iranian Shias help the Kurd Sunnis go around Iraq Shias? Don’t know but right now Iran is desperate to deal with anyone that can help increase their oil revenue. Initially the Kurd exports represent almost $10 billion per year with a potential of increasing to over $70 billion per year. Such cash flow can create a lot of motivation to find ways to cooperate.