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Iraq's Kurdish oil output falls as pipeline outage continues

Published by , Editorial Assistant
World Pipelines,

Oil production in Iraq's Kurdistan region continues to drop as export flows to Turkey's Ceyhan port show few signs of restarting after a stoppage that has lasted almost two months.

Turkey halted Iraq's 450 000 bpd of northern exports through the Iraq-Turkey pipeline on 25 March after an arbitration ruling by the International Chamber of Commerce (ICC). The ICC ordered Turkey to pay Baghdad damages of US$1.5 billion for unauthorised exports by the KRG 2014 - 2018.

The 59 day stoppage is estimated to have cost the Kurdistan Regional Government (KRG) more than US$1.5 billion. The halt, coupled with limited storage space in the region, sent most of the region's 450 000 bpd of production offline within weeks. Fields that had continued producing are now offline or operating with reduced output.

The 4500 bpd Taq Taq field is no longer producing into storage, said a spokesperson at operator Genel Energy. The Khurmala field is now producing at about 50 000 bpd, according to a source familiar with field operations.

This is a reduction from 100 000 bpd a month ago and 135 000 bpd before the pipeline stoppage. Resulting lost revenue for the KRG stands at more than US$1.5 billion, according to Reuters estimates based on exports of 375 000 bpd, the KRG's historic discount against Brent crude and 59 days of outages.

On 13 May, Iraq asked Turkey to resume pipeline flows and loading operations at Ceyhan. Turkish pipeline operator BOTAS said it needed more time to check the technical feasibility of the pipeline to resume flows, an Iraqi oil official said. However, BOTAS has yet to receive instruction from Turkish authorities, the source said, citing unofficial contact with Turkish energy officials.

"We're talking about weeks, not days, as an expected time frame to resume exports. This issue is more political now than technical," the source said.

Representatives of Iraq and Turkey's energy ministries were not immediately available for comment. Iraqi government officials previously told Reuters they blamed elections for the delay. Turkey held presidential elections on 14 May but neither of the two main candidates exceeded the required 50% of the votes and a run-off is scheduled for 28 May.


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