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KRG Oil Flow to Turkey Begins

Source: Reuters 1/2/2014, Location: Middle East

Crude oil from Iraqi Kurdistan has started flowing via a new pipeline to the Turkish Mediterranean export hub of Ceyhan but will not be shipped to world markets without the consent of Baghdad, Turkish Energy Minister Taner Yildiz said.

Yildiz hopes a deal can be reached this month for exports to begin, he told a news conference in Ankara.

Flows through the pipeline would start at 300,000 barrels per day (bpd) and rise to 400,000, he said.

Turkey signed a multi-billion-dollar energy package late last year with Iraqi Kurdistan (KRG) under which the semi-autonomous region plans independent energy exports via Turkey.

Kurdistan could eventually export some 2 million bpd of oil to world markets and at least 10 billion cubic metres per year of gas to Turkey.

Its bid to export oil and gas independently from Baghdad has infuriated officials in the Iraqi capital, which claims sole authority to manage Iraqi oil.

Turkey has been working to get the central government on board before exports start.

"The flow of crude oil from Iraq has begun. It is being stored. It will not be exported without the consent of the Iraqi government," Yildiz told the news conference.

The Turkish-KRG deal has significance for major oil companies as well as for the Kurds and Turkey, which stand to benefit from domestic supply and onward westward export through Ceyhan.

Kurdistan has struck deals with ExxonMobil, Chevron and Total among others as it seeks to develop its energy industry.

Ankara has set up the Turkish Energy Company (TEC), a state-backed entity which has struck partnership deals with Exxon and will be Turkey's counterparty in dealings with Kurdistan.

Yildiz visited Baghdad in December for talks with Iraq's Deputy Prime Minister Hussain al-Shahristani, who has long opposed Turkey's courtship of the Kurdish region.

Baghdad says Kurdish efforts towards oil independence could lead to the break-up of Iraq, but Turkey has repeatedly said it respects Iraq's sensitivities over territorial integrity and that increasing oil revenues will help the whole of the country.

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