June 19 (Bloomberg) -- 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’s natural resources minister said.
The pipeline to Fishkabour near the frontier with Turkey will 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 such as DNO International ASA and Genel Energy Plc with investments in Kurdish oil fields. 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 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.”
The Kurdish region, which currently exports 30,000 barrels a day by truck to Turkey, plans to increase shipments to 1 million barrels a day by the end of 2015 and 2 million barrels a day by 2019, once the pipeline network is operational, Hawrami said. A first section linking the fields of Taq Taq and Khurmala is now complete and being tested, he said. A planned second section will run to Fishkabour.
“We expect to see around 200,000 barrels flowing in the first phase of the pipeline from Taq Taq-Khurmala,” Hawrami said. Oil from the Tawke field, closer to Fishkabour, will boost the flow to 300,000 barrels a day, and the entire system’s carrying capacity will eventually exceed 1 million barrels a day, he said.
The Kurdish region’s oil-production capacity is to increase to 400,000 barrels a day by the end of 2103 from 300,000 barrels a day now, Hawrami said.
The Kurds currently produce crude from four oil fields and will start pumping from six others by year-end, he 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 gas to Turkey in 2016, Hawrami said.
Iraq has the world’s fifth-largest crude reserves, according to data from BP Plc. 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.
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