Kirkuk-Ceyhan Pipeline Restart Update: No Clear Signals

Crude oil exports from Iraq’s northern fields via the pipeline to the Turkish port of Ceyhan are not showing clear signs of resumption anytime soon, after a senior Iraqi official said flows can’t restart until commercial and financial issues have been resolved, following an earlier statement from the Turkish Energy Minister Alparslan Bayraktar that said the pipeline can restart this week.

• “The pipeline is ready to operate and within this week, we will start operating the Iraqi-Turkey pipeline, which after resuming operations will be able to supply half a million barrels” of oil a day to global markets, Bayraktar said.
• A response by Iraqi officials stated flows are not able to restart soon before commercial and financial issues have been resolved.
• Both the Iraqi and Turkish parties have named several reasons in the past as to why flows remain halted. While Turkey has been blaming technical works and the issues between the Iraqi federal government and the KRG, Iraq has said financial issues and Turkey’s election in May resulted in a delay to the resumption.
• Iraq’s SOMO recently said exports via the pipeline are expected to resume as a test soon. This was following a series of meetings between SOMO, the KRG and the Turkish pipeline company BOTAS to discuss technical and commercial issues.
• Prior to that, the US Coordinator for the Middle East and North Africa Brett McGurk and Senior Advisor to the President for Energy and Investment Amos Hochstein emphasized the urgency of reopening the Iraq-Turkey pipeline as soon as possible in a meeting with the Iraqi Prime Minister.
• The Turkish Energy Minister Alparslan Bayraktar said mid-September that Turkey is about to conclude the damage assessment of the pipeline post earthquakes, which was one of the reasons for the delayed restart of the pipeline.
• In addition to technical works at the pipeline, financial issues are also holding up the restart of flows. Turkish officials said that Ankara has no intention of paying the fine that it was ordered in March and is asking the Kurds to pay it to Baghdad as they were the benefactors.
• Tensions between the Iraqi federal government the KRG also continued recently as both parties are accusing the other side to not living up to the latest budget agreement, in which the KRG is required to hand over 400kbpd of its crude production to SOMO to receive its share of federal funding.
• The Turkish President Tayyip Erdogan was planning a visit to Baghdad in August, which had been postponed. Sources said the visit had become unlikely as Turkey and Iraq have disagreed on resolving disputes over oil exports, water and security.
• Iraq was forced to halt around 470kbpd of crude exports from the northern region on 25 March through the export pipeline to the Turkish port of Ceyhan. The stoppage removed around 400kbpd of crude oil controlled by the KRG and 70kbpd controlled by the federal Iraqi government.
• Iraq’s crude oil exports in September stood at 3.438mbpd, up from 3.42mbpd in August, data from the Iraqi Oil Ministry showed.