The semi-autonomous Kurdistan region of Iraq currently produces around 350,000 barrels of crude oil per day. However, the oil is only sold to local buyers at drastic discounts because the important export route via a pipeline to Turkey’s Mediterranean coast remains blocked.
Kurdistan’s crude oil production is currently around 50,000 bpd below production levels before March 2023, when the pipeline to Turkey’s Ceyhan was closed due to an international dispute, according to figures provided to Argus by Myles Caggins, a spokesman for the Kurdistan Petroleum Industry Association (Apikur).
Kurdish oil shipments to Turkey via the pipeline of about 450,000 bpd came to a halt last year after being suspended in March 2023 due to a dispute over who should approve Kurdish exports.
The impasse followed a ruling by the International Chamber of Commerce in March 2023 in a dispute between Turkey and Iraq over Kurdish oil. The ICC ruled in favor of Iraq, which had argued that Turkey should not allow Kurdish oil exports through the Iraqi-Turkish pipeline and the Turkish port of Ceyhan without permission from the Iraqi federal government.
The member companies of the Apikur association continue to produce oil in the semi-autonomous Iraqi region, but have to sell their crude oil to local buyers at a significant discount of around $45 to $50 per barrel below the international crude oil price, estimates Caggins of Apikur.
“Production volumes have generally increased since the pipeline was closed in March 2023. All Apikur members remain focused on eventually reopening the pipeline for export,” the spokesperson told Argus.
Kurdistan has been unable to export its oil via pipeline for over a year, but crude continues to flow on tanker trucks from the semi-autonomous Iraqi region to the border with Iran as part of smuggling operations.
According to a Reuters investigation, it is estimated that more than 1,000 such tanker trucks transport at least 200,000 barrels of Kurdish oil per day to Iran and Turkey.
By Charles Kennedy for Oilprice.com
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