Iraq’s oil ministry is prepared to resume exports from Kurdistan through a Turkish pipeline that has been offline for almost two years. Despite Iraq and Turkey expressing readiness to restart operations, unresolved disputes hinder progress. Recent parliamentary amendments offer hope for a resolution, but the situation remains complicated by OPEC production commitments.
The Iraqi oil ministry has confirmed its readiness to resume oil exports from the Kurdistan region through a pipeline to Turkey, which has been inactive for nearly two years. Despite this readiness, an ongoing dispute between the Kurdistan Regional Government and Baghdad remains unresolved. Although both Iraq and Turkey have stated their intent to restart oil exports, the pipeline’s reopening has not yet occurred.
Iraq has urged Kurdish officials to begin delivering oil to the state marketing organization, SOMO, to restart exports in alignment with the budget law’s stipulations and OPEC-mandated production limits. However, no specific date has been provided for the restart. The Kurdistan region responded, indicating that it has not received approval from the central government regarding the quantity of oil to be allocated for domestic use and payments to producers.
The resumption of oil shipments through the pipeline presents a challenge for Baghdad, which is bound by OPEC+ agreements to curtail crude output but has struggled to meet its commitment. The heightened scrutiny of OPEC’s production levels follows recent calls from former U.S. President Donald Trump for the organization to lower oil prices.
This pipeline issue began in March 2023 when Turkey ceased operations due to a court ruling mandating it to compensate Iraq, which was set at $1.5 billion. Turkey later attributed the shutdown to repair needs from recent earthquakes but subsequently declared that the pipeline was ready to resume operations, contingent upon Iraq taking the necessary actions to restart flows.
In a development this month, Iraq’s parliament approved a budget amendment that permits a higher payout of $16 per barrel for oil production and transportation, indicating progress towards resolving the ongoing situation between the two parties.
In conclusion, Iraq is poised to restart oil exports via the Turkish pipeline, pending resolution of a long-standing dispute with the Kurdistan region. While both Baghdad and Ankara have expressed readiness to proceed, the lack of agreement on key issues has hindered progress. Recent legislative changes, however, could signify a potential breakthrough amidst ongoing OPEC obligations.
Original Source: www.energyconnects.com
