Iraq is prepared to resume oil exports through a Turkish pipeline from Kurdistan, which has been inactive for nearly two years; however, disputes between Kurdish and central authorities have delayed the reopening. Baghdad seeks to implement production limits in line with OPEC, while Kurdish officials have not agreed on domestic oil allocation. Efforts to resolve outstanding issues are ongoing, with a recent budget amendment aiming to aid negotiations.
Iraq’s oil ministry has reaffirmed its readiness to resume oil exports from Kurdistan to Turkey via a pipeline that has been inactive for nearly two years. However, disagreements between the Kurdistan Regional Government and the central government persist, which has prevented the pipeline from reopening despite previous declarations of preparedness from both parties.
Baghdad has requested that Kurdish officials deliver crude oil to the State Organization for Marketing of Oil (SOMO), in accordance with the mechanisms outlined in the budget law and within the production limits set by OPEC. Despite this, the Iraqi oil ministry has not provided a specific timeline for the resumption of exports.
Kurdish officials have countered, stating that they have not received the central government’s approval regarding the volume of oil designated for domestic use and the compensation for companies involved in production and transport. This situation presents a challenge for Baghdad, which is bound to implement crude output reductions under OPEC+ agreements but has struggled to meet its commitments.
The ongoing issues surrounding oil production and exports are under scrutiny, particularly following former President Donald Trump’s call for OPEC to lower oil prices earlier this year. The pipeline issue began in March 2023 when Turkey halted operations due to an arbitration court’s ruling for Iraq to receive $1.5 billion. While Turkey indicated readiness to reactivate the pipeline, discussions between Iraq and Turkey have faced obstacles related to operational and financial matters.
Recently, Iraq’s parliament approved a budget amendment allowing the government to pay a higher fee of $16 per barrel for oil production and transportation, which may aid in addressing the deadlock over the pipeline’s operations.
In conclusion, while Iraq is prepared to restart oil exports through the Kurdish pipeline to Turkey, unresolved disputes between regional and central authorities remain a significant barrier. The Kurdish government has not consented to oil allocation procedures, and Baghdad’s commitments to OPEC must be balanced with the desire to restore exports. Political and technical negotiations continue to hinder progress, despite recent legislative amendments aimed at increasing cooperation.
Original Source: www.energyconnects.com
