The potential renegotiation is the latest step in the saga that started in March 2023, when Turkey closed the link after an arbitration court ordered the country to pay Iraq $1.5 billion over unauthorized exports. Numerous attempts to restart shipments have since failed – including due to disagreements between Iraq, its semi-autonomous Kurdistan region and companies operating in the area.
The original agreement, first inked in 1973, concerns the pipeline carrying oil from the semi-autonomous Iraqi region of Kurdistan to the Turkish port of Ceyhan on the Mediterranean. Flows along the Kirkuk-Ceyhan pipeline, which has a capacity for 1.6 million barrels daily, have now been suspended for two years amid a financial dispute between Ankara and Baghdad.
The Kurdistan Regional Government will supply Iraq’s state oil marketer SOMO with 230,000 barrels a day as part of a deal for Baghdad to release funds for salaries in the northern region, people familiar with the matter said. The transfer of the crude is a crucial element for an agreement between the federal and semi-autonomous administrations to restart exports through a pipeline to Turkey’s Mediterranean coast.
OPEC’s second-largest producer, Iraq, was the single biggest supplier of crude from the cartel to the United States in May, per data from the U.S. Energy Information Administration (EIA) cited by Iraqi media outlets Shafaq News and IraqiNews.
It has been over two years since the Baghdad-based Federal Government of Iraq (FGI) placed an embargo on independent oil exports from the Erbil-based Kurdistan Region of Iraq (KRI). The legal basis for the halting of these essential flows to the finances of the semi-autonomous region of Kurdistan was the International Chamber of Commerce’s (ICC) order that they would not be resumed until Turkey paid the FGI the US$1.5 billion in damages for these allegedly unauthorised oil exports over many previous years.
Although the ‘No Iranian Energy Act’ was introduced to U.S. lawmakers on April Fools’ Day it is no joke as far as the Americans are concerned and the Iraqis will find little cause for merriment in its contents either. As highlighted by Chairman of the Republican Study Committee, Congressman August Pfluger, this legislation is part of President Donald Trump’s maximum pressure campaign against Iran’s leaders.
Turkey is currently in talks to explore for oil and gas in Bulgaria, with similar plans for exploration in Iraq and Libya, Turkish Energy Minister Alparslan Bayraktar has revealed. According to the minister, state-owned energy company Turkiye Petrolleri AO (TPAO) will sign an agreement with an unnamed foreign partner within the next month to conduct exploration in Bulgaria’s section of the Black Sea.
Wood has secured two engineering and procurement framework agreements worth $11 million from TotalEnergies EP Ratawi Hub to support redevelopment work at Iraq’s Ratawi oil field.
The contracts are part of the Gas Growth Integrated Project (GGIP), a multi-energy initiative aimed at improving Iraq’s natural gas production and electricity supply. Under the three-year agreements, Wood will help advance the Associated Gas Upstream Project (AGUP), a key component of GGIP that involves debottlenecking and upgrading existing facilities.
While both countries appear aligned on their strategic goals, several challenges persist. Chief among them is the unresolved dispute over the Iraq–Türkiye Pipeline (ITP), which has halted Iraqi oil exports to Türkiye for over two years due to diplomatic and financial disagreements. The ongoing dispute between Baghdad and the KRG over revenue sharing and control of oil resources adds further complexity. International oil and gas companies operating in the KRG region also withhold cooperation until outstanding fiscal and contractual issues are addressed.
The recent reiteration by Iraq Oil Ministry of a 7 million barrels per day (bpd) oil production target within the next five years has spurred activity among Chinese firms that continue to dominate the country’s oil and gas sector. As it stands, more than a third of all Iraq’s proven oil and gas reserves and over two-thirds of its current production are managed by Beijing’s companies, according to industry figures. This translates into Chinese companies having a combined direct share in around 24 billion barrels of reserves and responsibility for production of around 3.0 million bpd. The latest in the very long line of Beijing’s firms to benefit from its ongoing stealthy takeover of Iraq’s huge oil and gas assets is China Huanqiu Contracting & Engineering Company (HQC), which has signed a huge project management consultancy contract for the supergiant West Qurna 1 oilfield.