Kurdistan Pressures Baghdad With Turkey Pipeline Push

Source: Reuters 7/1/2013, Location: Middle East

Sparks fly as workmen weld together a pipeline set to carry crude from the self-ruled Kurdistan region of Iraq to Turkey, defying the central government and shifting the energy balance of power in the region.

Some 600 km away, Iraqi officials in Baghdad's heavily fortified oil ministry are threatening dire consequences if the pipeline is completed, but appear powerless to prevent the Kurds exporting oil without their consent.

Turkey's courtship of the Kurds has strained relations with Baghdad, which says the pipeline would set a precedent for other provinces to pursue independent oil policies, potentially leading to the break-up of Iraq.

"They tell us to finish it as soon as possible because they don't want the Iraqi government to do something... but it cannot do anything," said an engineer at the site in the northern Kurdish province of Duhok. "This is very important for Kurdistan because it will benefit the economy."

At an estimated cost of $200 million, the 281-kilometre (174-mile) pipeline will reduce the autonomous region's reliance on Baghdad. For the Turks, it will open up a new energy corridor and allow them to scale back their dependence on Russia and Iran for oil and gas.

Neither side has been deterred by the United States, which has urged both the Kurdistan Regional Government (KRG) and Turkey to abandon the project.

"The export of oil and gas is not a monopoly of any single entity to be decided in Baghdad," KRG Natural Resources Minister Ashti Hawrami said in a speech in London last month. "Indeed, it is our duty as Iraqis under the federal constitution to pursue export routes for oil and gas to secure our future."

'Last-Minute Decision'

A trench dug through fields parched by summer heat marks the future course of the pipeline, which was initially designed to supply gas but later converted for oil and re-routed toward Fishkhabour, a strategic point where the borders of Iraq, Turkey and Syria converge.

It is a highly sensitive region in the eye of three overlapping storms: civil war in Syria, the contested frontier between Arab Iraq and Kurdistan, and a three-decade-long conflict involving with Kurdish rebels in southeastern Turkey.

Workmen now laying the final stretch of the pipeline are on track to finish in September, with initial flows of 200,000 barrels per day (bpd) expected.

Once it reaches Fishkhabour, now just 10 km away, it remains to be seen whether the pipe will be tied into the existing line running from Kirkuk to the Turkish port of Ceyhan at a metering station controlled by Baghdad, or beyond there, either before the Turkish border or after it.

"I think it will be a last-minute decision," said a Kurdistan-based industry source on condition of anonymity.

As much as 200,000 bpd of crude from Kurdistan used to flow to world markets through the Kirkuk-Ceyhan pipeline, but those exports dried up last year in a row over payments for oil companies operating in the northern enclave.

In recent years, the Kurds have signed their own contracts with the likes of Exxon Mobil, Chevron Corp and Total antagonising Baghdad, which claims sole authority to manage the exploration and exports of Iraqi oil.

The two sides recently began a new round of negotiations to resolve their differences, which are rooted in a fundamental disagreement about the degree to which power should be centralised in Baghdad.

"I believe if this pipeline system is up and running it will help expedite a compromise," said another industry source in Kurdistan on condition of anonymity. "At any rate, this will not stop the pipeline between the KRG and Turkey".


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Related Categories: General  LNG Carriers  LNG Terminal  Natural Gas Storage  Oil and Gas Pipeline  Oil Storage  Railways  Tank Truck  Tankers 

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