Iraq’s oil ministry is poised to restart exports from Kurdistan via Turkey after a two-year suspension, with ongoing disputes complicating the process. Baghdad seeks to resume oil flow through SOMO but faces challenges regarding production limits and Kurdish consent. Turkey’s involvement adds complexity as Iraq navigates OPEC restrictions and recent budget changes, with an increased fee for oil production potentially aiding negotiations.
Iraq’s oil ministry has announced its readiness to resume oil exports from the Kurdistan region via a pipeline to Turkey that has been inactive for nearly two years. However, the ongoing dispute between the Kurdish authorities and the Iraqi central government remains unresolved. Both parties expressed their willingness to restart the flow of oil for over a year, yet the pipeline has yet to reopen due to unresolved issues.
The Iraqi government has requested Kurdish officials to begin supplying oil to the state marketing company, SOMO, in accordance with the budget law and production limits defined by OPEC. The oil ministry did not provide a specific timeline for this restart, complicating the situation further. In response, Kurdish officials highlighted the lack of agreement on the amount of oil allocated for domestic use and payments to producers.
The resumption of pipeline shipments presents a challenge for Baghdad, which is required to reduce oil production under OPEC+ agreements but faces difficulties complying with these commitments. The scrutiny of the organization’s production levels has intensified, particularly following calls from U.S. President Donald Trump for lower oil prices earlier this year.
The ongoing pipeline closure dates back to March 2023 when Turkey halted operations following a court ruling mandating it compensate Iraq $1.5 billion. Although Turkey indicated the pipeline needed repairs, it later claimed readiness for operations, leaving Iraq to initiate flow resumption, which has not occurred yet due to ongoing negotiations.
Recently, Iraq’s parliament has passed a budget amendment allowing for an increased payment of $16 per barrel for oil production and transport, signaling potential progress towards resolving the ongoing standoff and facilitating the resumption of oil exports.
The situation surrounding Iraq’s oil exports via the Turkish pipeline underscores ongoing tensions between the Kurdish region and the central government. While both parties have expressed readiness to restart exports, unresolved issues related to budget, domestic consumption, and production quotas continue to obstruct progress. The recent budget amendment may pave the way for resolution, but significant hurdles remain.
Original Source: www.energyconnects.com
