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Turkey Allows Unilateral Kurdish Oil Exports as Iraq Ties Fray

Turkey and Iraqi Kurds defended last week’s sale of more than 1 million barrels of Kurdish oil to world markets, dismissing Baghdad’s claim before an international court that the sale was unauthorized.

Turkey’s Energy Minister Taner Yildiz said yesterday that Iraq had agreed that Kurdish-held northern Iraq could export 100,000 barrels of oil a day and that Turkey didn’t violate agreements, state-run Anadolu agency reported today. The Kurdistan Regional Government, which controls the semi-autonomous Kurdish region in northern Iraq, dismissed Iraq’s May 23 claim before the International Chamber of Commerce’s International Court of Arbitration in Paris, and vowed in a statement yesterday to continue exporting oil.

The export of Kurdish crude through a pipeline controlled by the central government in Baghdad deepens the divide between Iraqi Kurds, who want to control oil and gas resources in the north, and the Baghdad government, which says all energy transactions require its approval. Turkey’s collaboration with Iraqi Kurds further complicates the issue, while straining ties with Baghdad.

“Independent oil exports amount to a powerful step for Iraq’s Kurdish region to strengthen the regional economy,” Oytun Orhan, an analyst at the Center for Middle Eastern Strategic Studies in Ankara, said by phone today. “Turkey, heavily reliant on imported energy, did not want to the miss the opportunity to become the conduit for energy exports from the region, while downplaying importance of political snags.”

Ready to Engage

Both Yildiz and the Iraqi Kurdish administration said they were ready to engage with Baghdad authorities to resolve differences. Yildiz said the oil belongs to all of the Iraqi people and proceeds are being held by Turkey’s Halkbank, to be shared between Iraq’s central government and the Kurdish region in “a fair and just manner in line with the Iraqi constitution.”

Turkey says it is seeking to develop ties with all sides in Iraq to improve trade and to fully use the Baghdad-controlled pipeline through which Iraqi Kurds are now pumping oil to Turkey’s Mediterranean oil terminal of Ceyhan. Turkey also has expressed interest in building a new oil pipeline to carry oil from the Iraqi port of Basra to Turkey.

To contact the reporter on this story: Selcan Hacaoglu in Ankara at shacaoglu@bloomberg.net

To contact the editors responsible for this story: Andrew J. Barden at barden@bloomberg.net Amy Teibel, Karl Maier

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