SULAIMANI (ESTA) — Iraq and Turkey are set to begin technical talks by early next week on resuming Iraq’s northern oil exports, but hopes for a quick resolution are slim, two sources told Reuters on Tuesday.
Turkey halted Iraq’s 450,000 barrels per day (bpd) of exports through a crude oil pipeline from the semi-autonomous Kurdistan region in northern Iraq to the Turkish port of Ceyhan on March 25.
The 80 days halt has cost the Kurdistan Regional Government (KRG) over $2 billion, Reuters calculations found.
Discussions at a technical level regarding the resumption of exports between Iraq and Turkey are set to take place over the weekend or early next week, the two sources familiar with discussions said on condition of anonymity.
The Turkish energy ministry and the spokesperson for Iraq’s oil ministry were not immediately available for comment.
Turkish state energy company BOTAS says the pipeline needs further technical checks before a restart and will send a technical note on the pipeline’s status in the coming days, an Iraqi oil official from the state-run Northern Oil Co. (NOC) told Reuters.
“This does not mean exports will immediately restart as this decision requires high-level political talks,” the source said further, adding a Turkish energy delegation was expected in Baghdad, but had yet to set a date.
Turkey’s decision to suspend exports followed an arbitration ruling by the International Chamber of Commerce (ICC), which ordered Turkey to pay Baghdad damages of $1.5 billion for unauthorised exports by the KRG between 2014 and 2018.
Attempts to restart the pipeline were delayed by Turkey’s presidential elections last month and discussions between state-owned marketer SOMO and the KRG over an export deal, which has now been reached.
Hopes of a restart increased when Turkey’s President Tayyip Erdogan named Alparslan Bayraktar as energy minister on June 3 as part of his cabinet for his new five-year term.
Among the issues to resolve, sources previously told Reuters Turkey was seeking to negotiate the size of damages it was ordered to pay in the arbitration case.
It also wants outstanding issues in other open arbitration cases to be permanently resolved before it agrees to the resumption of flows, the sources said.
Separately, Iraq’s parliament approved on Monday a 2023 budget that included some articles that remove the KRG’s financial autonomy.
The Kurdistan region is short of cash because of the pipeline halt and Iraqi politicians and Kurdish lawmakers said it had no other option but to accept the budget, of which it will receive 12.67% of the 198.9 trillion dinar ($153 billion) allocation.
The Reuters estimate that the KRG has lost more than $2 billion over the 80 days of the pipeline outage is based on exports of 375,000 barrels per day and the KRG’s historic discount against Brent crude. The pipeline had also been exporting around 75,000 bpd of federal crude.
