Iraq is ready to resume North Oil exports by Reuters

Iraq is ready to resume North Oil exports by Reuters
Iraq is ready to resume North Oil exports by Reuters

© Reuters.

From Arif Muhammad

BASRA, Iraq (Reuters) – Iraq wants to resume oil exports via a pipeline from the Kurdistan region in northern Iraq to the port of Ceyhan as of Saturday, but is waiting for Turkey’s approval, Iraqi Oil Minister Hayan Abdul Ghani said on Friday.

Turkey holds presidential elections on Sunday, a move some observers say could delay the resumption of oil flows. The Turkish Energy Ministry did not respond to a request for comment on a possible resumption of oil flows.

Abdul-Ghani said in an interview with Reuters on Friday that Iraq is ready to pump 485 thousand barrels per day, including 400 thousand barrels from the semi-autonomous Kurdistan region and between 75 thousand and 85 thousand from the Kirkuk oil fields.

On March 25, Turkey stopped pumping 450,000 barrels per day of northern oil exports through the pipeline (TADAWUL:) after a ruling in an arbitration case issued by the International Chamber of Commerce.

The Chamber of Commerce ordered Turkey to pay Baghdad $1.5 billion in compensation for allowing the Kurdistan Regional Government to illegally export oil from 2014 to 2018.

Abdul-Ghani said that paying compensation is not up for discussion with Turkey, but sources told Reuters earlier that Turkey is seeking to negotiate such compensation and that it wants a final solution to other open arbitration cases before resuming the flows.

Abdul Ghani added that the halt in oil flows in March coincided with a request made by Turkey to inspect the pipeline and storage tanks for any damage caused by the February 6 earthquake.

He said that Iraq is waiting for a response from Türkiye regarding the completion of the inspection and maintenance processes.

Iraq’s request to resume oil flows, starting on Saturday, came to the Turkish energy company BOTAŞ, after dealers buying crude from the Kurdistan region signed new contracts with the Iraqi state oil marketing company (SOMO).

Abdulghani said the KRG agreed to allow SOMO to market its crude oil and set prices in the same formula that SOMO uses for its oil. Three informed sources said that the proceeds of its export will be deposited in a bank account for the regional government with Citi Bank in the UAE, and Baghdad will be able to conduct audits.

SOMO also entered into contracts with buyers of KRG crude. One of the three sources said that the contracts concluded recently have a validity period of three months, but they do not cover the large debts owed by the Kurdistan Regional Government to commercial companies.

Bassem Muhammad, Undersecretary of the Minister of Oil for Extractive Affairs, told Reuters that the issue of the debts of the Kurdistan Regional Government will be discussed with the region through the Ministries of Oil and Finance.

He added that the Iraqi government is serious about reaching an agreement that satisfies both parties.

A source said earlier that oil-producing countries in the region have asked the KRG to prioritize debt repayment and to make transparent and regular payments conditions for any new investments and maximum export flow once the pipeline resumes.

Abdul-Ghani said that Iraq is working to address the problems facing international oil companies, which lead to delays in production and additional costs, such as long waiting times for issuing entry permits for employees and customs clearance procedures.

(Reporting by Aref Muhammad from Basra – Prepared by Suha Jado, Marwa Gharib and Muhammad Attia for the Arabic Bulletin – Edited by Ayman Saad Muslim)

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