Iraq’s Northern Oil Exports Stuck on Türkiye Negotiations

  • 4/14/2023
  • 15:15
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Oil exports from northern Iraq to the Turkish port of Ceyhan remain at a standstill almost three weeks after an arbitration case ruled Ankara owed Baghdad compensation for unauthorized exports. The March 23 arbitration ruling by the International Chamber of Commerce (ICC) ordered Türkiye to pay Baghdad damages of $1.5 billion for unauthorized exports by the Kurdistan Regional Government (KRG) between 2014 and 2018. In response, Türkiye halted the flows of 450,000 barrels per day. It wants to negotiate the payment and resolve a second arbitration case regarding unauthorized flows since 2018 before it restarts them, according to sources. Pipeline operators have yet to receive any instruction to restart flows, a source familiar with the exports told Reuters on Friday on condition of anonymity. Two other sources told Reuters that Baghdad has yet to request Türkiye reopens the pipeline. "Anything regarding oil now is in the hands of Baghdad and Türkiye, both sides have to reach an agreement to restart flows," said Lawk Ghafuri, head of foreign media affairs for the KRG. Türkiye is seeking in-person negotiations relating to the $1.5 billion it was ordered to pay Iraq in damages, a separate source told Reuters. Iraq's state-owned marketer SOMO is waiting to finalize some technical issues essential to restarting flows with the KRG's ministry of natural resources, two Iraqi oil officials told Reuters. Iraq's federal government in Baghdad and the KRG on April 4 signed a temporary agreement hoping to get the flows restarted. Lost revenue from the halt for the KRG stands at around $550 million, according to Reuters calculations based on exports of 375,000 barrels per day, the KRG's historic discount against Brent crude and 20 days of outages. The Turkish energy ministry and Iraq's oil ministry did not respond to requests for comment. Iraq has also petitioned a US federal court to enforce the arbitration award against Türkiye, according to documents filed with the court.

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