Iraqi Kurdistan Region’s Oil Output at Risk after Türkiye Halts Pipeline Exports

  • 3/28/2023
  • 08:00
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Oil production in Iraq's semi-autonomous Kurdistan region (KRI) is at risk after a halt in northern exports has forced firms operating there to cease output or divert crude to storage, where capacity is limited. Iraq was forced to halt around 450,000 barrels per day (bpd) of crude exports, or half a percent of global oil supply, from the KRI on Saturday through an export pipeline that runs from its northern Kirkuk oil fields to the Turkish port of Ceyhan. Oil firms in the region have been left in limbo as the pipeline stoppage is set to continue until Ankara, Baghdad and the KRG find a settlement to resume exports. Türkiye stopped pumping Iraqi crude from the pipeline after Iraq won an arbitration case in which it said Türkiye had violated a joint agreement by allowing the Kurdistan Regional Government (KRG) to export oil to Ceyhan without Baghdad's consent. The news supported crude prices, with Brent rising over $3 per barrel on Monday. Canada-based Forza Petroleum, formerly Oryx Petroleum Corporation, said on Monday it was shutting in production from the 14,500 bpd Hawler license in the KRI as storage was nearing full capacity. Dallas-based HKN Energy, which operates the Sarsang block, said it would shut in operations "within a week if no resolution is reached" as its storage facilities approach capacity. The block produced 43,038 bpd in the fourth quarter of last year. HKN wrote to US representatives last year warning that a cessation of exports through the pipeline would trigger a collapse of the KRI economy. Gulf Keystone Petroleum, which operates the 55,000 bpd Shaikan field in the KRI, said in a statement on Monday that its "facilities have storage capacity that allow continued production at a curtailed rate over the coming days, after which the company will suspend production". DNO and Genel Energy said they were storing oil in tanks, which can accommodate several days of production. The two firms hold stakes in the Tawke and Peshkabir fields, which produced 107,000 bpd of oil last year. Genel also holds stakes in the Taq Taq and Sarta fields, which produced a respective 4,500 bpd and 4,710 bpd last year, according to the company's annual results. Production at the Khurmala oil field run by Kurdish group Kar was unaffected at around 135,000 bpd and heading into tank, a source familiar with the field operations told Reuters. Shamaran Petroleum said in a statement: "The company will remain in close contact with the other oil producers in the Kurdistan Region and with relevant government officials, and will continue to monitor this situation closely."

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