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Iraq’s government and oil companies working in the country’s north blamed each other for delays in resuming a key pipeline to Turkey, divisions that could keep the link shut for even longer.
Oil firms’ refusal to deliver Kurdish crude to the federal government for exports is one of the main reasons holding up the pipeline’s resumption, Iraq’s oil ministry said in a statement Monday. The companies “haven’t seen any proposal” from either Baghdad or the Kurdistan administration that would lead to oil shipments restarting, an association representing the firms said in a March 23 statement.
The pipeline that can carry almost half a million barrels of oil every day to Turkey’s Mediterranean coast has been shut for a year, taking supply out of global markets at a time crude prices in London have pushed above $85 a barrel. It’s also resulted in more than $11 billion of lost revenue for Iraq, according to the association known as Apikur.
The companies, and the Kurdish authorities, have failed to submit contracts that were previously signed without Baghdad’s approval, to the federal oil ministry for revisions, the ministry said Monday. This has held up plans for new agreements in accordance with the Iraqi constitution, it said.
Turkey in March last year closed the pipeline after an arbitration court ordered it to pay Iraq $1.5 billion in compensation for transporting oil through the link without Baghdad’s approval. Ankara, which had claimed the pipe was closed because it needed repairs after two massive earthquakes in February, said in October that it was ready for operations and it was up to Iraq to resume flows.
But financial and legal complications have kept the link closed. The companies in Kurdistan want to be paid three times the $6.9 a barrel in fees that Iraq gives producers in other parts of the country, the oil ministry said. The firms also want their past dues — including $1 billion for oil produced between September 2022 and March 2023 — cleared, Apikur said.
OPEC+ Quotas
With exports shut, the oil companies have been producing some crude and selling them locally. The federal ministry said that’s causing some problems with the country’s production quotas under the Organization of Petroleum Exporting Countries.
Reports from OPEC showed that Kurdistan was producing 200,000 to 225,000 barrels a day, but the output was without the consent of Iraq’s oil ministry, it said. Baghdad, which has opposed OPEC’s data for its production in the past, promised to cut its oil exports to 3.3 million barrels a day in the coming months to compensate for producing above its limits in January and February.
“The lack of compliance with the federal government’s general oil policy puts the reputation of Iraq and its international commitments at risk,” the ministry said in the statement.
The country reduced production to an average of 4.2 million barrels a day in February, according to a report from OPEC this month. That put it about 200,000 barrels a day over its agreed limit.
