Iraq resumes oil exports from Kurdistan to Turkey after two-year halt

Crude oil began flowing again on Saturday from Iraq’s semi-autonomous Kurdistan region to Turkey, marking the first shipment in over two years after an interim agreement ended a prolonged deadlock, Iraq’s oil ministry confirmed.

The resumption of exports started at 6:00 AM (GMT+3). “Operations started at a rapid pace and with complete smoothness without recording any significant technical problems,” the ministry said in a statement.

Under the deal between Iraq’s federal government, the Kurdistan Regional Government (KRG), and foreign oil companies operating in the area, approximately 180,000 to 190,000 barrels per day (bpd) will be transported to Turkey’s Ceyhan port, Iraq’s oil minister told Rudaw on Friday.

The United States had urged the restart, which could eventually raise flows to 230,000 bpd, returning significant volumes of crude to global markets as OPEC+ ramps up production to expand market share.

The Kirkuk-Ceyhan pipeline had been shut down in March 2023 after the International Chamber of Commerce ordered Turkey to pay USD 1.5 billion in damages for unauthorized exports managed by Kurdish authorities.

Under the preliminary agreement, the KRG will supply at least 230,000 bpd to Iraq’s state oil marketer SOMO, while reserving 50,000 bpd for local consumption, officials familiar with the deal said. An independent trader will handle sales at the Ceyhan port using SOMO’s official pricing.

Revenue from each barrel will be split, with USD 16 per barrel transferred to an escrow account and distributed proportionally to the producers, and the remainder going to SOMO, according to Iraqi officials.

Norwegian company DNO said it has no immediate plans to export through the pipeline, though its local buyers could still ship its crude. DNO and joint venture partner Genel Energy have highlighted the need to address around USD 1 billion in arrears owed by the KRG to producers, of which DNO is owed about USD 300 million.

The eight companies involved in the deal and the KRG have agreed to meet within 30 days of the pipeline’s reopening to finalize a mechanism for settling outstanding debts.