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Iraq-Turkey Crude Flow Resumption Shows Little Sign of Progress


The Iraq-Turkey oil pipeline is still being held up by disagreements with oil companies, while Iraq has been significantly overshooting its OPEC+ quota in recent months, despite lower output from the Kurdistan region.

  • Iraq’s crude oil output stood at 4.292mbpd. The country pumped 4.305mbpd on average during 4Q 2023 – above its 2023 OPEC+ quota of 4.22mbpd, according to OPEC secondary sources. Iraq exported 3.486mbpd of crude oil in December, ministry data showed.
  • Iraq’s new production baseline for 1Q 2024 is set at 4.009mbpd, after the country’s 2024 quota got lowered to 4.208mbpd and Iraq pledged to voluntarily cut its crude oil output by 211kbpd during 1Q 2024, INA said.
  • Iraq will significantly need to lower its oil production this month in order to produce in line with its new baseline. The lingering question is whether the resurgence in Kurdish crude oil output would come at the cost of Iraqi production.
  • The restart of flows via the pipeline to the Turkish port of Ceyhan is being held up further by disagreements with producers over payments, Iraq’s PM Mohammed Shia Al-Sudani said earlier this month.
  • This week the natural resources ministry of the KRG invited international oil companies operating in the region to a discussion to start resuming oil exports from the region.
  • “The purpose of the meeting is to update you regarding the progress of the negotiations with the Federal Government of Iraq in matters that concern you and other IOC partners. The amendments of the 2023 budget law and the subject of compensation for the IOC’s entitlements will be the main topics of the discussion”, according to part of the email sent to the IOC’s.
  • In mid-January, Iraq has asked local authorities in the Kurdistan region to cut oil production as the country is seeking to meet its new OPEC+ quota of 4mbpd, Argusmedia reported.
  • Norway’s DNO has not been asked by the KRG to reduce its oil production to meet Iraq’s OPEC+ quota, Managing Director Chris Spencer said. Instead, the local government is encouraging DNO to increase production, Spencer added.
  • DNO announced last month, its Tawke field output in the Kurdistan region has been increasing to around 90kbpd in December, up from an average of 26kbpd during 3Q 2023.
  • There is no release of official numbers of Kurdish crude oil production, but Argus estimated that northern Iraq is pumping around 240kbpd.
  • Iraq’s PM said in mid-December, the country is studying a change in its federal budget which would allow Bagdad to pay international oil companies operating in Kurdistan, enabling the resumption of oil exports to Turkey. The change would require the government to pay an average of $8/b as a recovery cost for oil produced in Iraq outside of Kurdistan. The recovery cost in Kurdistan stands at $21/b.
  • Turkey confirmed in early October the technical readiness of the pipeline.
On 25 March 2023, Iraq was forced to halt around 470kbpd of crude exports from the Kurdistan region through the export pipeline to the Turkish port of Ceyhan.

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