Iraq is prepared to restart oil exports from Kurdistan via a pipeline to Turkey after two years of inactivity, but unresolved disputes with the Kurdish government complicate matters. While both Iraq and Turkey have indicated readiness to resume flows, a lack of agreements on oil allocations and OPEC production cuts continues to hinder progress. Recent budget changes suggest movement towards addressing these issues, but no official restart date has been set.
Iraq’s oil ministry has declared its readiness to resume oil exports from the Kurdistan region through a Turkish pipeline that has remained inactive for nearly two years. Despite this readiness, longstanding disputes between the Kurdistan Regional Government (KRG) and Iraq’s central government are yet to be resolved. Although both parties have expressed willingness to restart oil flow over the past year, the pipeline remains closed.
Baghdad has requested that Kurdish officials begin delivering crude oil to the State Oil Marketing Organization (SOMO) to restart exports. This approach seeks compliance with the production limits laid out in Iraq’s OPEC commitments. However, a specific timeline for resumption has not been provided, indicating uncertainties still exist.
Kurdish authorities responded by stating they haven’t secured the central government’s approval regarding oil allocations for domestic needs and payments to production and transport companies. This disagreement complicates the situation further, as coordination and agreement are necessary for effective operations.
The resumption of exports through the pipeline presents additional challenges for Baghdad, which is under OPEC+ obligations to reduce crude production but has struggled to meet these targets. The rising focus on these commitments follows external pressure, notably from former President Donald Trump, regarding oil pricing strategies.
The situation surrounding the pipeline escalated in March 2023 when Turkey suspended operations following a court ruling mandating a $1.5 billion payment to Iraq. Initially cited as repairs following significant earthquakes, Turkey later suggested that operational readiness is contingent on Iraqi action.
Recently, Iraq’s parliament approved a budget amendment enabling the government to provide an increased fee of $16 per barrel for oil extraction and transportation. This move indicates progress towards addressing the ongoing bottlenecks in negotiations between the parties involved.
Iraq is poised to potentially restart oil exports through the Turkish pipeline after nearly two years, contingent on resolving disputes with the Kurdistan region. Ongoing negotiations regarding oil deliveries and financial arrangements remain a critical hurdle. Amid OPEC commitments to limit production, this situation presents complex challenges for both the Iraqi central government and Kurdistan. Recent budget amendments signal steps towards resolution, yet concrete timelines for export resumption are still unclear.
Original Source: www.energyconnects.com
