Iraq is nearing a preliminary agreement to restart oil pipeline exports from its semi-autonomous Kurdistan region to Turkey, following delays in negotiations, according to sources familiar with the discussions. This deal, involving Iraq’s federal government, the Kurdistan Regional Government (KRG), and international oil companies, could potentially add at least 230,000 barrels per day to the market, coinciding with OPEC’s efforts to increase output and reclaim market share. Currently, Iraq exports about 3.4 million barrels of oil daily from its southern ports, but the Kirkuk-Ceyhan pipeline has been inactive since March 2023 due to a legal ruling requiring Turkey to pay $1.5 billion for unauthorized exports.
Turkey has expressed a willingness to resume exports; however, legal and political disputes among Baghdad, the KRG, and international operators have kept the flow halted. Recently, Iraq’s cabinet granted preliminary approval for the resumption, and international oil companies in Kurdistan have tentatively agreed to the terms. The KRG is expected to deliver at least 230,000 bpd to Iraq’s state oil marketer, SOMO, while allocating an additional 50,000 bpd for local consumption.
An independent trader would manage sales from Ceyhan, with $16 per barrel going into an escrow account for producers, while the remaining revenue would be directed to SOMO. Although the draft plan does not clarify when producers will receive approximately $1 billion in unpaid dues from previous months, Genel Energy’s CFO noted significant progress in the negotiations, emphasizing that the agreement still needs finalization.