Turkey awaits Iraq guarantees to restart crude exports

Market: Condensate, Crude oil
11/04/23

Turkey will not allow exports of crude from northern Iraq to resume from its Ceyhan port until it gets a response from Baghdad about having a meeting on an outstanding arbitration, a source with knowledge of the matter told Argus.

Around 400,000 b/d of crude produced in northern Iraq's semiautonomous Kurdistan region has been kept out of export markets since 25 March — Ceyhan being the only viable outlet — and producers in the region have shut oil fields with storage filling.

The pipeline was stopped after the International Court of Arbitration of the International Chamber of Commerce (ICA-ICC) ruled that Turkey had breached a 1973 agreement by allowing oil marketed by the Kurdistan Regional Government (KRG) to be exported, without Baghdad's consent, between 2014 and 2018. The court ordered Turkey to pay Iraq $1.47bn in compensation.

Although a deal was signed between the KRG and Baghdad on 4 April, which was meant to lead to the resumption of crude exports, Ankara is holding off pending assurances about a second arbitration case, again brought by Baghdad on the same issue and relating to the period since 2018.

"Talks should be held soon, but Ankara needs some guarantees from Baghdad especially in regards the arbitration case for 2018 onwards," the source said.

The KRG, and the producers operating in its territory, are now spectators in a dispute over which they have no control or leverage. The deal the KRG signed with Baghdad gave away much of the marketing rights it had to its crude, on the understanding that exports would resume.

The most recent cargo of KRG crude to load from Ceyhan was on the Mareta on 24 March.

By Bachar Halabi and Aydin Calik

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