Iraq Kurds to Pump Oil to Turkey in Truce With Baghdad

Iraq’s Kurds plan to start pumping oil to Turkey next month via a pipeline controlled by the central government in Baghdad, signaling an easing of their dispute over resources, according to two people familiar with the plan.

The new line will take Kurdish oil into the existing pipe that runs from Kirkuk in Iraq to Turkey’s Mediterranean port of Ceyhan, initially carrying 150,000 barrels a day starting in December, according to the Turkish energy industry officials who asked not to be identified because the information isn’t public. An Iraqi energy industry manager, who requested anonymity for the same reason, said the state oil company has accounted for the extra oil in 2014 plans.

Ashti Hawrami, the Kurdish Regional Government’s natural resources minister, said at a press conference last month that the 40-kilometer pipeline will have a capacity of 300,000 barrels a day. Mehmet Sepil, president of London-listed Genel Energy, said at the same conference that the pipeline from Dohuk to Fishkabur on the Turkish border will carry 200,000 barrels a day from its Tawke and Taq Taq fields.

The Iraqi official said the Kurdish oil will be metered when it feeds into the main pipeline, at Fishkabur near the Turkish border, and again when it arrives at Ceyhan.

The agreement signals a truce on the issue between the Iraqi Kurds, who say they should have control over oil and gas resources in the north, and the Baghdad government, which argues that all energy transactions need central approval.

More Willing

Iraq’s government under Nouri al-Maliki, which has sought to block energy agreements between Turkey and the Iraqi Kurds, is struggling to control a wave of deadly sectarian attacks.

“Maliki is now more willing to taking to consideration the interests of Turkey and the Kurdistan regional government because he needs stability,” Stephen Larrabee of Rand Corp., a policy institute based in Santa Monica, California, said in an interview in Ankara.

Iraq’s Kurds want to raise oil production and expand beyond the capacity of current pipelines, and say they’ll build a link to bypass the Baghdad-run network.

Iraqi Kurdistan’s output may increase to 1 million barrels a day by the end of 2015 and 2 million barrels by 2020, Hawrami said on Oct. 31. Kurdistan currently exports 30,000 to 50,000 barrels a day in trucks to Turkey.

“As Iraq normalizes, Turkey will meet its energy needs through oil and natural gas deals with Iraq,” Turkish Energy Minister Taner Yildiz told NTV television in an interview in Paris today. “Contracts with northern Iraq and agreements with the central government are part of this chain and it will done transparently.”

Yildiz said a new oil terminal with similar capacity to Ceyhan may be built on the Mediterranean coast.

“The entry of northern Iraqi oil would not affect the price of oil in world markets but it is an important step for normalization of whole of Iraq and for Turkey’s supply security,” he said.

To contact the reporters on this story: Selcan Hacaoglu in Ankara at shacaoglu@bloomberg.net; Onur Ant in Ankara at oant@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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