Iraq seeks resolution with KRG to restart crude oil pipeline to Türkiye
Photo shows a general view of Türkiye's Mediterranean port of Ceyhan, which is run by state-owned Petroleum Pipeline Corporation (BOTAS), some 70 km (43.5 miles) from Adana. (AA Photo)
Iraq is working to resolve technical issues with the Kurdish Regional Government (KRG) to restart a crude oil export pipeline to Türkiye, which has been shut down for nearly two years. This shutdown has cost Iraq an estimated $19 billion in lost revenue, according to Iraq’s Foreign Minister Fuad Hussein.
Legal framework agreed, technical discussions ongoing
Speaking to Bloomberg News at the Munich Security Conference, Hussein confirmed that the legal framework for restarting the pipeline had been agreed upon.
He stated, “Now it’s about technical questions between the oil companies and Iraqi federal government and KRG to start exporting.”
He added that the current discussions are centered on determining how many barrels can be exported versus how much will be used for internal consumption.
The resumption of oil exports from the KRG could help alleviate the strain on global oil markets caused by Iraq’s reduced output. Before the shutdown, Iraq was exporting around 400,000-500,000 barrels per day from its northern fields, including those in the KRG.
The pipeline, which transports oil from the KRG to the Turkish port of Ceyhan, was halted in March 2023 following an arbitration court ruling that Türkiye owed Iraq $1.5 billion in damages for transporting oil without Baghdad’s consent. Türkiye has refused to pay the fine, instead requesting that the KRG cover it.
Despite the dispute, Hussein downplayed the issue, calling it “a small dispute” and suggested that it could be resolved during upcoming negotiations between Iraq and Türkiye. These talks are set to focus on renewing the oil transportation contract, which is due to expire next year.
Strategic necessity for Iraq
Hussein also emphasized that Iraq’s oil production is constrained by OPEC and OPEC+ agreements, but reopening the pipeline remains crucial for the country’s economic security.
“We have no alternative pipeline. This one is crucial for us,” he said, highlighting the importance of the pipeline in stabilizing Iraq’s economic situation amidst global geopolitical uncertainties.
The closure of the Iraq-Türkiye pipeline has cut Iraqi crude exports by 500,000 barrels per day, exacerbating global supply tightness. Resuming KRG oil exports would play a critical role in stabilizing oil markets, offsetting production cuts, and restoring Iraq’s revenue stream.
