Iraq’s Kurds to Export Oil by New Pipeline ‘Very Soon’

Iraq’s Kurds will start exporting crude by pipeline “very soon” after the completion of a new link to the Turkish border by the end of September, the Kurdistan Regional Government Natural Resources Minister said.

The pipeline to Fishkabour near the frontier with Turkey, will eventually have a capacity of 1 million barrels a day by 2015, Ashti Hawrami said today at a conference in London. The semi-autonomous region in northern Iraq is “well on its way” to have enough oil to fill the line’s capacity, he said.

The landlocked, self-governed Kurdish enclave halted crude exports through the Iraqi central government-run pipeline since December. The Kurds are sparring with the Oil Ministry in Baghdad over the sharing of revenue from crude sales and payments owed to international companies with investments in Kurdish oil fields such as DNO International ASA (DNO) and Genel Energy Plc. (GENL) The KRG plans its own oil and natural gas pipelines through neighboring Turkey as a step toward economic self-sufficiency.

When asked, Hawrami didn’t confirm whether the KRG would be using the Iraqi central government’s export facilities in Fishkabour or building its own.

“If the Kurds go ahead with the exports to Turkey, it will have a big implication,” Robin Mills, head of consulting at Dubai-based Manaar Energy Consulting and Project Management, said in a telephone interview. “They want to develop their oil and they’ve been struggling to do that because of the problems of getting paid and the problems of having consistent exports, so they kind of see this as the only way to go ahead.”

Trucking Oil

The Kurdish region is currently exporting 30,000 barrels a day by truck to Turkey. Its oil-production capacity is due to increase to 400,000 barrels a day by the end of the year from a current 300,000 barrels a day, Hawrami said.

The Kurds will start crude production from six more oil fields by the year-end, Hawrami said. The region has awarded five oil exploration blocks to a Turkish entity, he said, without identifying it.

“With this pipeline it puts the groundwork in place for the deal with Turkey,” Mills said.

The KRG will also begin exporting natural gas to Turkey in 2016, Hawrami said.

Iraq has the world’s fifth-largest crude reserves, according to data from BP Plc. (BP/) The country revised its own estimate upward in April by almost 5 percent to 150 billion barrels. The nation’s Kurdish region holds an additional 45 billion barrels, according to the KRG. Iraq produced 3.15 million barrels a day in May, data compiled by Bloomberg show.

To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Nayla Razzouk in Dubai at nrazzouk2@bloomberg.net

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

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