Iraqi PM sends export restart decision back to Turkey

Spanish Market: Crude oil
04/05/23

Iraqi prime minister Mohammed Shia al-Sudani threw the ball back in Turkey's court today as to when exports of northern Iraqi crude from the Mediterranean port of Ceyhan will resume, indicating that an agreement between Baghdad and Erbil is not behind the restart delay.

"Why [wait] two weeks? If the Turkish side approaches us today, we resume exports," al-Sudani told the Iraq Forum held in Baghdad, referring to a two-week timeline Iraq's oil minister Hayan Abdulghani mentioned earlier this week.

Iraqi officials have recently cited underlying "technical issues" as one main reason holding back a final agreement between the Iraqi federal government and Kurdish Regional Government (KRG), which will eventually allow exports to resume. Al-Sudani's statements, however, suggest that Turkey is the cause for delay.

"The remaining issues are connected to the technicalities, such as the bank accounts, and the Turkish side," al-Sudani said. "Turkey has officially informed us that they need to inspect the pipeline due to concerns that it might need rehabilitation following the recent earthquake [that struck Turkey in February]."

"We await. The delay is not a result of the lack of agreement. We await as to when the pipeline is ready to resume exports," he said.

Forty-one days have passed since Turkey on 25 March halted exports of around 470,000 b/d of northern Iraqi crude. About 400,000 b/d of KRG crude normally flows through the Kirkuk-Ceyhan pipeline along with an estimated 70,000 b/d of federal Iraqi oil.

The decision was triggered by an international arbitration ruling that said Turkey had breached a 1973 pipeline agreement by allowing KRG oil to be exported without Baghdad's consent between 2014 and 2018.

Argus reported on 11 April that Turkey is also holding out on paying $1.47bn that the court said it owed Baghdad in compensation for breaching the pipeline deal, pending an agreement over the payment and clarity over Iraq's position regarding a second arbitration case, brought by Baghdad, over the same issue but relating to a different time period — from 2018 onwards.

"We received news from the Turkish side that they are testing the pipelines," the oil minister said on 3 May. "We do not reject the tests because it is in our interest if the oil exportation resumes."

Turkey is scheduled to hold presidential and parliamentary elections on 14 May, the toughest electoral challenge to the two-decade rule of President Recep Tayyip Erdogan. The elections could be factoring into the delay.

By Bachar Halabi

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