Kurds to Truck Crude to Turkey Again in a Week, Minister Says

Iraq’s Kurdish region will resume sending crude to Turkey by truck in about a week and is in talks with international companies to develop oil fields, even as the country’s central government branded such deals illegal.

The Kurdistan Regional Government will export 20,000 barrels a day of crude, and 10,000 a day of condensate, in “about a week or so,” after halting three weeks ago for technical reasons, Natural Resources Minister Ashti Hawrami said at a conference in London today. The semi-autonomous territory is in “advanced” talks with two or three oil explorers to work on extracting crude, having already signed agreements with Chevron Corp. (CVX) and Exxon Mobil Corp. (XOM)

Kurdistan will only resume shipments through Iraq’s main export pipeline to Turkey, suspended in December, if the central government pays what is outstanding on previous sales, Hawrami said. Hussain al-Shahristani, Deputy Prime Minister for Energy Affairs for the federal authorities in Baghdad, said that unilateral Kurdish agreements with foreign firms violate national law.

Possible exports of 250,000 barrels a day are “not going anywhere because there is no revenue coming for the contractors, and Iraq once again negated on its promises to implement the agreement” between the two governments, Hawrami told reporters during a briefing at Chatham House in London.

Genel Energy Plc (GENL) has been trucking crude from the Kurdish region to Turkey, which is exchanged for refined fuels. The deliveries were halted several weeks ago for the installation of monitoring equipment at the border, Hawrami said.

Output Capacity

Kurdistan has oil production capacity of 400,000 barrels a day, about 250,000 a day of which is needed for domestic consumption, Hawrami added. This includes 130,000 a day from the Taq Taq field operated by Genel Energy Plc, and 135,000 at the Tawke oilfield, he said.

The regional government is “satisfied” with relations with international firms operating in its territory, such as Exxon Mobil, Hawrami said. Iraq’s oil minister warned the U.S. company on Jan. 27 that it must stop dealing with Kurdistan if it wants to proceed with the contract it signed to operate the West Qurna-1 oil field in the south of the country.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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