Turkey says ready to help export Iraqi Kurdistan oil

A ship is connected to the Basra Oil Terminal off the Iraqi coast in the waters of the Northern Gulf close to the port town of Umm Qasr. Iraq exported just over 2.5mn bpd in March, down from February’s 2.80mn bpd, a record.

Reuters/Ankara

Turkey is ready to help Iraqi Kurdistan export its oil to world markets once oil storage tanks in the Mediterranean port of Ceyhan are full, Turkey’s Energy Minister Taner Yildiz said yesterday.

Once the tanks are full and there is an excess amount, “we would like this to be offered to world markets ... on behalf of Iraq,” Yildiz said in an interview with Turkey’s NTV Television.

“Regardless of the volumes, Iraqis will auction and sell this oil at world market prices. This could be done via Tupras or brokers in other countries,” Yildiz added.

Oil flow from the Kurdistan Regional Government’s (KRG) pipeline via Turkey started in December and so far around 1.35mn barrels of oil have been stored in tanks at Turkey’s southern port of Ceyhan.

The capacity of the three tanks at Ceyhan allocated for Kurdish oil is around 2.5mn barrels.

But exports of Kurdish oil have been held up due to slow progress in talks between the KRG in Arbil and the central government in Baghdad, who are at loggerheads over the payment method and sharing of Iraq’s oil revenues.

Baghdad’s withholding of funds to punish the Kurds for trying to export oil via the new pipeline has only added to the deadlock.

Looking to break the impasse, the semi-autonomous region last week announced that it will export 100,000 bpd through a Baghdad-controlled federal pipeline from April 1.

“As a goodwill gesture the Kurdistan Regional Government (KRG) has offered to make a contribution to Iraqi oil pipeline exports to give the negotiations the maximum chance of success,” Prime Minister Nechirvan Barzani said in a statement.

The oil is to be exported via Iraq’s State Oil Marketing Organisation (SOMO) and the revenues deposited in the Development Fund for Iraq (DFI) account in New York.

Iraq oil exports to drop as violence hits northern flow

Reuters/London

Oil exports from Iraq’s southern terminals have held within sight of a 35-year high so far in March, according to loading data, reflecting Iraq’s efforts to expand capacity and deliver supply growth in 2014.

But, keeping a question mark over the sustainability of Iraq’s oil revival, shipments of Kirkuk crude from northern Iraq have plunged due to sabotage, industry sources said, meaning total Iraqi exports will drop from last month’s record rate.

Exports from Iraq’s southern terminals have averaged 2.47mn bpd in the first 25 days of March, according to shipping data tracked by Reuters. An industry source, who also monitors the exports, had a similar estimate and said shipping delays have reduced.

“So far, it has been around 2.5mn bpd and delays are only a few days,” the source said. That would be on a par with February’s southern exports of 2.50mn bpd, the highest since 1979.

Iraq has expanded capacity at the southern ports, which typically handle almost all of Iraq’s oil exports. From the north, Iraq also exports crude from its Kirkuk fields to Ceyhan in Turkey.

The northern pipeline suffers frequent interruptions to oil flow and was attacked 54 times by insurgents last year, keeping Kirkuk shipments far below their potential.

Sabotage suspended flows along the pipeline at the start of March and escalating violence has prevented technicians from fixing damage, sources from Iraq’s North Oil Company (NOC) said last week. As a result, oil industry sources said just one tanker and one pipeline shipment of Kirkuk have been exported in March, equal to a daily rate of less than 30,000 bpd, down from 300,000 bpd in February.

That would bring Iraqi exports to just over 2.5mn bpd in March, down from February’s 2.80mn bpd which Deputy Prime Minister for Energy Hussain al-Shahristani described as a record rate.

Northern exports could increase if the autonomous region of Kurdistan starts to sell oil via a pipeline to Turkey. A long-running dispute between Baghdad and the KRG remains unresolved.

Still, Kurdistan has agreed to export 100,000 bpd via the Iraqi pipeline network from April 1 as a “gesture of goodwill” while negotiations with Baghdad are ongoing.