Iraq expects oil exports from its Kurdistan region to resume as soon as this week following a two-year halt, after a landmark deal was reached with producers, its foreign minister said.
Flows through the key Ceyhan pipeline from Kurdistan to Turkey’s Mediterranean coast will resume “most likely this week,” Foreign Minister Fuad Hussein said in an interview in New York late on Wednesday. He added that Baghdad has also started negotiations with Turkey for a new pipeline agreement as the current one expires in 2026.
The restart of exports would be a boon for Iraq, since the halted pipeline has cost the country billions of dollars in lost revenue. The nation is OPEC’s second-biggest oil producer, pumping the vast majority of its crude from the south, and has been keen to increase output in the long-term and boost revenue after years of war and internal strife.
A breakthrough in negotiations between Baghdad, Kurdistan’s Erdil, and oil producers operating in the semi-autonomous region will allow an initial 230,000 barrels a day of oil through to international markets, Hussein said. That could reach up to 400,000 to 500,000 barrels a day with new investments and fields ramping up production in Kurdistan, he added.
Iraq resuming exports will channel more barrels into the global market at a time when it’s already on the brink of a glut.
Eight oil companies that together account for more than 90 percent of the Kurdistan region’s production have reached in-principle deals that “provide surety of payment” to the firms, they said in a statement earlier on Wednesday. Kurdistan’s regional government said it has signed the agreement with all the companies, except the region’s biggest producer, DNO ASA, and was awaiting the federal oil ministry’s approval.
Exports will resume while Iraqi officials will meet with DNO in the coming days, Hussein said. Having the company on board is important as it means bigger production volumes and “more oil will be exported.”
An official in Turkey said earlier this week the country would pose no obstacles to the flow of oil once the parties in Iraq have reached an agreement.
Iraq has lost $22 billion to $25 billion in revenue from the pipeline shutdown, Hussein said, an increase from the $19 billion loss reported in February.
The agreement ends a protracted supply disruption that started in March 2023, when Turkey closed the pipeline following an arbitration court’s decision. Various attempts to open it since have run into legal and financial issues, including oil companies’ demand for clearing past dues and clarity on future payments.
Source: by Lara Sanli & Salma El Wardany, Bloomberg