Turkey is trying to broker a deal between Iraq’s central government and the semi-autonomous Kurdish administration on how to resume Iraqi crude exports through its territory, according to Turkish officials.
Turkey halted flows through a twin pipeline in March after an arbitration court ordered it to pay about $1.5 billion in damages to Iraq for transporting oil without Baghdad’s approval. Ankara has no intention of paying the fine and is asking the Kurds to pay it in Baghdad, as they were the benefactors, the officials said.
A compromise is being sought over the competing demands of Iraq and the Kurdish administration over the sharing of oil export revenues, the officials said. The two sides have been fighting for years over rights to oil sales to Kurdistan, part of Baghdad’s long-running attempt to rein in the semi-autonomous region.
Turkey sees the $1.5 billion fine handed down by the Paris-based International Chamber of Commerce as an internal Iraqi matter and wants the KRG to resolve it with Baghdad. Turkey’s lost revenue from the suspension of oil flows — estimated at just over $1 billion a year — pales in comparison to what Iraq is losing, leading Turkish officials to believe that Baghdad and Erbil they will have a strong motivation to find a solution to the stalemate. said a senior official with direct knowledge of Turkey’s position, asking not to be identified, citing the sensitivity of the matter.
Government officials in Baghdad had no comment, while the KRG declined to comment.
Turkish Foreign Minister Hakan Fidan discussed energy, economic and security relations with the president and prime minister of the Kurdish government in Erbil on Thursday, after holding talks with his Iraqi counterpart in Baghdad earlier of week Turkish Energy Minister Alparslan Bayraktar also traveled to Erbil and held talks with Iraqi Oil Minister Hayyan Abdul Ghani.
Repair of ties
Turkey is heading to Baghdad to mend ties after years of estrangement as part of a reset in relations with Arab nations. Ankara is offering the Kurdistan Regional Government, or KRG, as well as the central government in Baghdad, help to build power plants and other infrastructure.
Baghdad has asked Turkey to collect the money from oil exports and transfer it to Iraq after deducting 12.6 percent of the quota allocated to the KRG, the officials said, speaking on condition of anonymity. The KRG, however, has told Turkey it wants to claim the full proceeds of exports through its territory, arguing it has been unable to raise funds from separate Iraqi oil exports, they said.
The pipeline from Kirkuk to the Mediterranean port of Ceyhan remains operational and Iraqi crude exports could begin quickly once a deal is reached, Turkish officials said, adding that Turkey aims to resolve the conflict as soon as possible possible
The pipeline shutdown has cut nearly half a million barrels of crude from global markets as Ankara refused to pay the $1.5 billion fine. Iraq had been exporting about 400,000 to 500,000 barrels a day from fields in the country’s north, including the Kurdish region, through the now-stopped pipeline.
It is unclear how much of that oil would return to world markets if there was a deal, as Iraq is already pumping very close to the limit of its OPEC quota.
–With the help of Khalid Al-Ansary.
