KRG Oil may Flow Through Turkish Pipeline Within Weeks

Source: Reuters 11/22/2013, Location: Middle East

Iraqi Kurdistan's oil exports may start flowing through its own pipeline via Turkey within weeks, and without necessarily agreeing payment protocol with the Baghdad central government, the region's natural resources minister Ashti Hawrami said.

"We could even see flows before Christmas," he told a conference in Istanbul on Thursday, bringing forward previous forecasts that the first flows would be early next year.

The 300,000 barrel per day (bpd) pipeline is being built by Iraq's semi-autonomous Kurdistan Regional Government (KRG) which has proposed taking 17 percent of Iraq's total oil revenues, based on an article in the country's constitution.

Hawrami said Arbil would press ahead with exporting oil whether or not Baghdad agree the payment plan. "We are not ignoring Baghdad but if nobody wants to speak with us, that's fine. We have been patient for ten years."

Once the pipeline comes online KRG will phase out exporting its exports by road to the Mediterranean port of Ceyhan.

"A big part of our production will go into this oil pipeline," Mehmet Sepil, president of Anglo-Turkish oilfield operator Genel Energy said on Friday, reiterating that oil would start flowing through the KRG pipeline within weeks.

He said Genel has the capacity to produce about 230,000 bpd at two of its fields - Taq Taq and Tawke - in Kurdistan. The company is at exploration stage in other fields in the region.

"By the end of 2014, our capacity in the two fields could go up to 350,000 bpd through new wells," he said.

Turkey's intense courtship of KRG has infuriated Baghdad and raised eyebrows in Washington which fears such KRG's independence could lead to a break-up of Iraq.

But there is little either can do to prevent the plans.

"Kurdistan is on the verge of becoming a major world exporter of oil, first, and then gas," Tony Hayward, Genel's chief executive officer and a former CEO of BP, told a panel.

Turkey has proposed that the revenues of KRG's oil exports be collected in an escrow account at a Turkish state bank until Baghdad and Arbil resolve their differences over the revenue.

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