Turkey says Iraq oil pipeline is ready to operate

The Iraq-Turkey pipeline (ITP) is ready to operate "as of yesterday — Wednesday", Turkey's energy minister Alparslan Bayraktar said today, adding that resumption of crude flows is dependent on Iraq.

"What we said at the [Adipec] conference in Abu Dhabi was this: the pipeline will be ready to operate by Wednesday" Bayraktar said. "We informed the other side [Iraq] that there are no issues related to the export of oil, for its storage at Ceyhan and for the volumes to reach global markets."

The pipeline, which carries 400,000 b/d of crude marketed by the Kurdistan Regional Government (KRG) and around 70,000 b/d of federal Iraqi crude, has been shut since March 25 by a dispute between Ankara and Baghdad over a ruling by the Paris-based International Chamber of Commerce (ICC). Bayraktar said the restart of exports from northern Iraq "is an issue related to Iraq and [has] to do with production in Iraq."

"What's important from our side is that the export pipeline and the terminal in Ceyhan is fully ready," he said. "We stand ready to handle any oil that comes our way."

But a senior Iraqi official told Argus today that "the situation remains the same" with regards to the pipeline. The same source told Argus last week that "the issue is not about logistics, but financial commitments".

Part of the negotiations between the countries is Turkey's ambition to use one of the two parallel pipelines that run from northern Iraq to Ceyhan for its domestic production.

"What we are producing in Gabar is going to be 100,000 b/d and we need to bring this oil to the Dortyol area or Ceyhan or Kirikkale," Bayraktar said in mid-September. "We need a pipeline. There is huge spare capacity in the ITP." The two pipelines have a combined capacity of 1.4mn b/d.

The ITP agreement expires in 2026 and Turkey is already thinking about the future.

Talks about how and when to restart pipeline flows have been underway between Turkey and Iraq since late June. Ankara had attributed the initial halt to inspection and assessment after an earthquake at the end of February, although the ITP was operational until the ICC ruling came out at the end of March. The ruling requires Ankara to pay Baghdad around $1.4bn.

Both countries are at loggerheads in multiple international arbitration courts. The ITP shutdown has cost the KRG around $5bn, according to the region's foreign minister Safeen Dizayee.

By Bachar Halabi and Aydin Calik