Iraq, Kurds Agree to Resume Oil Exports Via Turkey This Week

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(Bloomberg) — Iraq’s semi-autonomous Kurdistan region said it has reached an agreement with the federal government to resume oil exports through Turkey this week, after a legal spat pushed up crude prices. 

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“Following several meetings between the Kurdistan Regional Government & Federal Government, an initial agreement has been reached to resume oil exports through Ceyhan this week,” Lawk Ghafuri, the KRG’s head of foreign media affairs, said in a tweet.

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Turkey closed a pipeline running from northern Iraq to Ceyhan in March after an international business tribunal said KRG authorities shouldn’t export oil from the Mediterranean terminal without Baghdad’s approval. The move was part of Baghdad’s long-running attempt to assert its right to manage resources in Kurdistan, which has been pumping and selling oil independently.

The resumption would be for more than 400,000 barrels a day of Iraqi oil exports that go through Turkey. The deal will remain in effect until oil and gas law bill is approved by Iraqi parliament, Ghafuri said.

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London-listed Gulf Keystone Petroleum Ltd. said last week that it was shutting-in Shaikan field flows processed at Production Facility 1 on March 31. Other companies including DNO ASA and HKN Energy had already started to lower production in Kurdistan.

Baghdad says it’s up to the KRG to break the deadlock by accepting that Iraq’s state oil-marketing firm, known as SOMO, should handle Kurdish shipments from Ceyhan. Details of the agreement are yet to be made public. 

Relations between the KRG, based in Erbil, and Baghdad have improved since Mohammed Shia Al-Sudani became Iraq’s prime minister in October. The legal case was brought by a previous administration.

(Updates throughout with details and background)