Iraq's Kirkuk - Ceyhan Oil Pipeline About To Resume Operations

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Iraq's Kirkuk - Ceyhan Oil Pipeline About To Resume Operations

Flags of Turkey & Iraq (© Shutterstock/ruskpp)
Flags of Turkey & Iraq (© Shutterstock/ruskpp)

After nearly six months of difficult and protracted negotiations, Iraq's 970-km northern oil export route through Turkey will soon be ready to resume operation once checks on pipeline maintenance and repairs to flood damage, said Alparsian Bayraktar, Turkey's energy minister.

Turkey halted flows on Iraq's northern oil export route on March 25 after an arbitration ruling by the International Chamber of Commerce (ICC) ordered Ankara to pay Baghdad damages for unauthorised exports by the Kurdistan Regional Government (KRG) between 2014 and 2018.

Turkey then started maintenance work on the pipeline, which goes through a seismically active zone and which it says has been damaged by floods.

"As of today, the independent surveyor completed their survey and now they're preparing their report," Bayraktar said without mentioning a date for resumption of oil flows, in an embargoed press briefing held by the ministry on Thursday.

Iraq and Turkey previously agreed to wait until maintenance works were complete before resuming the pipeline that contributes about 0.5% of global oil supply. Sources said oil flows are not expected to start before October, with KRG losing roughly $4 billion in lost exports.

Turkey also calculates Iraq owes $950 million as a result of ICC arbitration; net of damages Turkey has to pay Iraq.

Given Turkey's reluctance to pay the full amount of arbitration awards, Iraq will likely settle for a reduced amount from Turkey.  Ankara wants Baghdad to withdraw a second arbitration case covering the period from 2018 onward and negotiate a reduced payment in this instance as well.

Finally Turkey wants Erbil and Baghdad to agree on a common position and negotiate the continuance of the pipeline agreement, which is set to expire in 2026.

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