Iraq’s oil minister ordered urgent repairs to a disused pipeline from northern fields to a Turkish port, a step that could eliminate the central government’s need to export crude via Iraq’s Kurdish region and further isolate the independence-seeking Kurds.

Minister Jabbar al-Luaibi directed the North Oil Co. and State Co. for Oil Projects to complete repairs on the pipeline from Kirkuk to the Mediterranean port of Ceyhan, the ministry said in an emailed statement. The link, once an artery for crude exports from Iraq’s oldest producing fields, hasn’t operated for years due to sabotage in areas occupied until recently by Islamic State militants.

Iraq wants to restore the pipeline’s export capacity of 250,000 to 400,000 barrels a day and possibly boost volumes in the future, the ministry said. Iraqi security forces regained control of the pipeline and surrounding territory after advancing against Islamic State late last year. The oil ministry didn’t say when repairs on the link, which would connect at the border with a Turkish pipeline, would be completed.

Iraq’s prime minister Haider Al-Abadi said last month that neighboring Turkey supports Iraqi central government control over all crude that the OPEC nation exports to Ceyhan though the Turkish-controlled pipeline. His comments suggested that the Turks may be reviewing their policy of letting Iraq’s landlocked Kurds export oil independently through the Turkish network. Relations between the semi-autonomous Kurds and the central government in Baghdad have frayed since the Kurds voted on Sept. 25 for independence.

The non-binding independence referendum puts at risk the Kurdistan Regional Government’s own oil exports via Turkey. The central government has been using the Kurdish link to ship crude from deposits it controls at Kirkuk.

The central government has long insisted that its crude-marketing agency SOMO has sole authority to export oil produced anywhere within Iraq’s borders. Iraq is the second-biggest producer in the Organization of Petroleum Exporting Countries.

Crude has been flowing normally through the Kurdish link to Turkey. The KRG-operated pipeline currently exports 600,000 barrels a day, a person with knowledge of the situation said, asking not to be identified because he’s not authorized to speak to news media.

Source:
courtesy of BLOOMBERG

by Khalid Al Ansary and Mohammed Sergie

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