Iraq, Kurds Agree to Resume Oil Exports Via Turkey This Week

(Bloomberg) -- Iraq’s semi-autonomous Kurdistan region said it has reached an agreement with the federal government to resume oil exports through Turkey this week, after a legal spat pushed up crude prices. 

“Following several meetings between the Kurdistan Regional Government & Federal Government, an initial agreement has been reached to resume oil exports through Ceyhan this week,” Lawk Ghafuri, the KRG’s head of foreign media affairs, said in a tweet.

Turkey closed a pipeline running from northern Iraq to Ceyhan in March after an international business tribunal said KRG authorities shouldn’t export oil from the Mediterranean terminal without Baghdad’s approval. The move was part of Baghdad’s long-running attempt to assert its right to manage resources in Kurdistan, which has been pumping and selling oil independently.

The resumption would be for more than 400,000 barrels a day of Iraqi oil exports that go through Turkey. The deal will remain in effect until an oil and gas law is approved by the Iraqi parliament, Ghafuri said.

London-listed Gulf Keystone Petroleum Ltd. said last week that it was shutting-in Shaikan field flows processed at Production Facility 1 on March 31. Other companies including DNO ASA and HKN Energy had already started to lower production in Kurdistan.

Iraq’s oil ministry in Baghdad said on Sunday that it hopes to reach an agreement to resume oil exports soon. The ministry said that it will announce the deal when “a final agreement is reached in accordance with the new understandings” for oil exports. Details of the agreement are yet to be made public.

Baghdad said last week that it’s up to the KRG to break the deadlock by accepting that Iraq’s state oil-marketing firm, known as SOMO, should handle Kurdish shipments from Ceyhan. 

Relations between the KRG, based in Erbil, and Baghdad have improved since Mohammed Shia Al-Sudani became Iraq’s prime minister in October. The legal case was brought by a previous administration.

(Updates with comments from Iraq’s oil ministry and background.)

©2023 Bloomberg L.P.