April 2024, Vol. 251, No. 4

Editor's Notebook

Editor’s Notebook: Few Winners in Iraq-Turkey Pipeline Fallout

By Michael Reed, Editor-in-Chief

(P&GJ) — Increasingly frustrated by impasses regionally, the eight member companies of the Association of the Petroleum Industry of Kurdistan (APIKUR) have gone so far as requesting that two U.S. lawmakers exert pressure on Iraq to reopen the Iraqi-Türkiye pipeline. 

The association membership is comprised of international oil and gas companies operating in the region, including three that are U.S.-owned and several with substantial U.S. equity and bond holdings. 

In separate letters to the Sen. Ben Cardin, of Maryland, and Rep. Hakeem Jeffries, of New York, APIKUR asked that restrictions be considered on future U.S. assistance to Iraq, if the nation continues to “economically strangle” the Kurdistan Region, while in the process doing harm to U.S. oil, production and export investments.  

Neither Cardin nor Jeffries have issued public statements about the “critical issue” placed before them, but in this case – one that involves a project that has been contentious since at least 2013 – it seems highly unlikely much headway will be made through Congressional involvement. 

Nonetheless, it would not be a stretch to describe the 600-mile (970-km) pipeline as providing the economic life blood to the Kurdistan Region (portions of Türkiye, Iraq, Iran and Syria), through its exportation of 450,000 bdp of oil to global markets. Despite its economic clout, though, operations have long been tricky. 

The most recent in a series of problems started in March 2023, when Türkiye, commonly referred to as Turkey, shut down the pipeline over an arbitration court ruling that ordered it to pay Iraq $1.5 billion in compensation for transporting oil without Iraq’s approval, between 2014 and 2018.  

Turkey claimed the closure of the pipeline was needed to repair damage from two huge earthquakes that occurred the previous month. Whatever the reason, the shutdown stopped about half-a-million barrels of oil a day from being sold. 

According to APIKUR, Turkey announced six months later, in October, that the pipeline was ready to resume operations but had not as a result of “a politically driven oil blockade,” which it blamed on Iraq. 

Iraq, meanwhile, may be in no hurry to reopen the pipeline in the first place, because the reduced supply of oil from the fields it controls goes a big way in helping the nation remain within OPEC+ quotas. Additionally, Iraq still has access to seaborne export routes to the south and trucking routes to Jordan. 

Adding to the potential for a further stalemate, a follow-up court arbitration, expected by analysts to take two years to complete, will be covering a second disputed period, from 2018 until now. 

The Turkish government and the governments of Iraq and Kurdistan have released statements since the court ruling, but none of those included full details about the decision. 

However, since the treaty regulating the pipeline requires that Iran ship a minimum guaranteed volume, this amount requires a minimum payment to Turkey, regardless of the amount of that flows. 

In 2013, the Kurdistan Regional Government (KRG), which is semi-autonomous in Iraq, started exporting oil on its own. 

Iraq originally filed for arbitration in 2014 with the Paris-based International Chamber of Commerce (ICC), concerning Turkey’s part in enabling oil exports from the Kurdistan region without the consent of the federal government of Iraq. 

Iraq said by transporting and storing oil from the Kurdistan region and loading it on tankers in Ceyhan without Iraq’s approval, Turkey and its state energy company BOTAS were in violation of the Iraq-Turkey pipeline agreement. 

The pipeline exports flow through a Kurdistan Regional Government pipeline to Fish-Khabur on the northern Iraqi border, where the oil enters Turkey and is pumped to the port of Ceyhan on its Mediterranean Coast. 

The Iraq-Turkey Pipeline comprises parallel 48-inch and 40-inch pipes and has a capacity of 1.6 MMbpd, though volumes have averaged 450,000 bpd. 

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