Kurdistan Oil Exports Via Turkey Pipeline Seen by End-Jan

Source: Reuters 1/8/2014, Location: Middle East

The first crude has started to flow through Iraqi Kurdistan's new pipeline across Turkey and the first independent exports are expected to begin at the end of this month, the Kurdistan Regional Government (KRG) said. The first parcel of 2 million barrels of oil will be sold via a tender, KRG's Ministry of Natural Resources said on the government's web site. It invited bidders for the January tender.

The monthly export parcels will then increase to 4 million barrels and 6 million barrels in February and March respectively, it said. The monthly exports are estimated to reach 10-12 million barrels in December. Iraqi Kurds and the central government in Baghdad have been at loggerheads over the share of oil revenues.

Baghdad, which claims the sole authority to manage Iraqi oil, was infuriated after Arbil signed a package of contracts with Turkey for oil and gas exports as well as for the construction of new pipelines.

The Baghdad government says Kurdish efforts towards oil independence could lead to the break-up of Iraq. Turkey's courtship of the Iraqi Kurds has also raised concern in Washington.

Turkish Proposal
But Turkey has repeatedly said it respects Iraq's sensitivities over territorial integrity and that increasing oil revenues will help the whole of Iraq.

Ankara has been working to get Baghdad on board and proposed setting up an escrow account at a Turkish state bank for the oil revenues to be deposited. The Iraqi government has yet to agree on the Turkish proposals.

KRG's new pipeline carries the Iraqi Kurdish oil to Turkey's Mediterranean export hub of Ceyhan. It is initially carrying heavy oil from Tawke fields and links up with the 40-inch-wide existing Kirkuk-Ceyhan pipeline to be exported to world markets.

"Crude oil from Taq Taq and other producing fields will soon be added to the export system, resulting in a blended medium crude oil..," the KRG statement said.

Prospective buyers will be able to lift crude oil shipments in Ceyhan "under similar arrangements" as those used for Iraq's State Oil Marketing Organisation (SOMO) for oil exports from Kirkuk.

Details of each parcel will be announced by the Ministry of Natural Resources and independent observers as well as representatives from SOMO will be invited to monitor the process, KRG said.

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