Resumption of Oil Exports from the Kurdistan Region
On Friday, Hayyan Abdel-Ghani, the Deputy Prime Minister for Energy Affairs, announced the imminent resumption of oil exports from the Kurdistan Region of Iraq through the Turkish port of Jihan. This development follows his visit to the Khor Al-Zubayr port, where he assessed the operations related to the gas pipeline linkage.
Abdel-Ghani indicated that Iraq would soon initiate oil export operations through the oil marketing company SOMO, starting at a rate of 185,000 barrels per day, which is expected to gradually increase to the volume outlined in the federal budget.
The Ministry of Oil confirmed early Friday that Abdel-Ghani’s field activities are part of the project to extend the dry gas transportation pipeline from Khor Al-Zubayr to Nazem Shatt Al-Arab, spanning 40 kilometers, designed to ensure the delivery of gas to electricity generation facilities.
Earlier in February, the Iraqi Ministry of Oil had announced that procedures for the Kurdistan Region’s oil export resumption were completed and urged regional authorities to provide oil volumes produced from operational fields to SOMO.
In March 2023, Turkey halted oil flows through the pipeline connecting the Kurdistan Region to the Jihan port. This suspension stemmed from a court mandate requiring Turkey to pay approximately $1.5 billion in compensation to Iraq for the transportation of oil without Baghdad’s consent. At that time, Ankara declined to cover the fine and requested that Erbil take responsibility for payment.
The pipeline’s closure has significantly impacted Iraqi oil exports, reducing them by approximately 500,000 barrels per day. The resumption of oil flows from Kurdistan is anticipated to mitigate some pressures on global markets stemming from decreased shipments from Iraq, a pivotal crude supplier.
Historically, Iraq exported between 400,000 and 500,000 barrels daily from its northern fields, including the Kurdistan Region, via the now-closed pipeline. Early this month, Minister Hayyan Abdel-Ghani stated that plans were in place to resume operations, targeting at least 300,000 barrels per day. The Iraqi administration is also actively engaged in discussions to enhance cooperation with the Kurdistan regional government for oil transport to SOMO.
Turkey has consistently maintained that the pipeline is ready for operation, emphasizing that the decision to resume flows rests with Iraq. Moreover, the United States has expressed robust interest in facilitating the flow of oil through the Iraqi-Turkish pipeline.
The resumption of shipments, however, poses a challenge for Baghdad, which is bound to reduce crude production in alignment with OPEC+ agreements, even as it strives to meet previously established discounts. Notably, the production and export practices of the Organization of the Petroleum Exporting Countries are under increasing scrutiny, especially following last month’s public appeal by U.S. President Donald Trump urging the group to lower oil prices.
