Iraq To Resume Oil Exports To Turkey Via Pipeline Shuttered A Decade Ago Amid Kurdish Negotiation Deadlock

In a significant development in the energy sector, Iraq is set to reactivate a previously dormant pipeline to Turkey, which could substantially impact regional oil exports and negotiations.

What Happened: Iraq is reviving a pipeline to Turkey, potentially exporting 350,000 barrels per day by month’s end, Reuters reported on Sunday. This move comes amid stalled negotiations with the Kurdistan Regional Government (KRG).

The Kirkuk-Ceyhan pipeline, inactive for a decade, offers an alternative to the KRG’s pipeline, which has been closed for a year. Baghdad views the KRG’s oil deals with foreign companies as illegal and demands that companies negotiate with the federal government for oil sales through the revived pipeline.

Islamic State attacks halted the pipeline’s operations in 2014. It was responsible for about 0.5% of the world’s oil supply.

“Major crude pumping station with storage facilities has been completed,” said Basim Mohammed,  Iraqi deputy oil minister for upstream affairs, indicating the pipeline’s readiness to restart flows soon.

After an arbitration court ruling last year, the KRG’s pipeline was shut down, citing treaty violations. Discussions to reopen it have been complicated by conflicting demands from Turkey, the KRG, and the federal government.

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Despite the friction, the Kurds and Baghdad rely on each other politically and economically. Kurdish oil exports typically pass through a pipeline to Turkey. Early tests on the pipeline within Iraq revealed leaks, prompting accelerated repair efforts.

The current Iraq-Turkey oil pipeline agreement is set to expire in mid-2025, and the resumption of the old pipeline’s operations will be a key topic in the extension talks, according to a government energy adviser.

Why It Matters: As the global oil market grapples with tight supply and rising demand, the reactivation of the Kirkuk-Ceyhan pipeline by Iraq could have significant implications. Earlier this month, oil prices were expected to potentially hit $95 per barrel this summer due to these market conditions, coupled with ongoing geopolitical tensions.

Moreover, the reestablishment of this route could alter the dynamics of regional oil politics, as Baghdad asserts its authority over oil exports, challenging the KRG’s independent oil deals.

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