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OIL: Iraq Pipeline Restart Delayed by Cost Dispute but Assists OPEC Compliance

OIL
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The restart of the Kirkuk-Ceyhan pipeline, which has been shut since March 2023, is held up by disagreements over how much to pay international oil companies operating in the northern region, according to Iraq’s prime minister cited by Bloomberg.

  • The federal administration’s budget allows it to pay $8 for every barrel of oil produced, but Kurdistan Regional Government contracts pay $26, said Iraqi Prime Minister Mohammed Shia Al-Sudani.
  • The pipeline halt has hit output from the region although restarting it could impact the country’s compliance with OPEC production quotas.
  • The delay is inadvertently helping Iraq get closer to its OPEC production limit with repeated pledges make deeper cuts to compensate for exceeding OPEC+ quotas earlier this year.
  • “We are committed to abide by the OPEC decisions and to preserve the price of oil in order to balance the interest of the users and the producers,” Al-Sudani said.
  • Crude production in northern Iraq’s semi-autonomous Kurdistan region is 350k b/d, Argus said late last month citing Apikur. Producers have been selling the oil locally at around $30-$35/bbl, well below global market prices.
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The restart of the Kirkuk-Ceyhan pipeline, which has been shut since March 2023, is held up by disagreements over how much to pay international oil companies operating in the northern region, according to Iraq’s prime minister cited by Bloomberg.

  • The federal administration’s budget allows it to pay $8 for every barrel of oil produced, but Kurdistan Regional Government contracts pay $26, said Iraqi Prime Minister Mohammed Shia Al-Sudani.
  • The pipeline halt has hit output from the region although restarting it could impact the country’s compliance with OPEC production quotas.
  • The delay is inadvertently helping Iraq get closer to its OPEC production limit with repeated pledges make deeper cuts to compensate for exceeding OPEC+ quotas earlier this year.
  • “We are committed to abide by the OPEC decisions and to preserve the price of oil in order to balance the interest of the users and the producers,” Al-Sudani said.
  • Crude production in northern Iraq’s semi-autonomous Kurdistan region is 350k b/d, Argus said late last month citing Apikur. Producers have been selling the oil locally at around $30-$35/bbl, well below global market prices.