19 hours ago
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Turkey still has reservations about granting permission to resume Kurdistan region oil exports, despite Baghdad and Erbil reaching an agreement regarding it, amid the harbingers of a crisis between Iraq and Turkey related to dues and financial compensation between the two sides.
Iraqi political circles say that Turkey is trying to exploit the need of Iraq and the region located in the north of the country to resume oil exports through the port of Ceyhan, in order to bargain, especially after the issuance of a ruling in favor of Baghdad that requires Ankara to pay financial compensation.
These circles indicate that Turkey has revived financial demands in connection with a previous agreement dating back to the seventies of the last century, and it seems that it is seeking some kind of barter.
Iraq had earlier submitted a petition to a US federal court to implement an arbitration ruling against Turkey related to its permission to export Kurdistan's oil over the past years without referring to the Iraqi Oil Marketing Company "SOMO".
The arbitration ruling, which was issued by the International Chamber of Commerce in the French capital, Paris, last month, awarded Iraq compensation for exporting Iraqi oil without Baghdad’s permission throughout the period from 2014 to 2018.
The Iraqi lawsuit against Turkey was based on its “violation of the provisions of the Iraqi-Turkish pipeline agreement signed in 1973,” which stipulates that Ankara must comply with the instructions of the Iraqi side regarding the movement of crude oil exported from Iraq to all storage and disposal centers and the final station.
The Iraqi petition, submitted to the District Court for the District of Columbia, asked the court to "recognize, confirm and enforce the final award of the arbitral tribunal."
The arbitration ruling prompted Turkey to stop the flow of oil, which equals about 0.5 percent of global supplies, in the pipeline to the Turkish port of Ceyhan.
Iraq's federal government and the Kurdistan Regional Government signed an interim agreement last week allowing northern oil exports to resume via Turkey, but the flows have not started, according to shipping companies.
Sources told Reuters earlier that Turkey wanted to settle another case, covering the period from 2018 onwards, before reopening the pipeline.
Iraq announced on March 25 that it had won the arbitration case. According to a source familiar with the case, the ruling included an order for Turkey to pay about $1.5 billion to Iraq before calculating interest in a ruling covering the period from 2014 to 2018. Three days later, the Turkish Energy Ministry said that the International Chamber of Commerce had also ordered Iraq to pay compensation to Ankara.
Experts believe that there are other motives behind Ankara's procrastination in resuming the flow of Kurdistan's oil, including waiting for the decision of the second session of the Arbitration Court, as Turkey hopes to reduce the percentage of financial fines that it must pay to the Iraqi side.
Experts point out that the ongoing delay in the level of oil export through the port of Ceyhan, its financial cost will be borne by the federal government in Iraq, because according to the agreement with Erbil, the latter must deliver 400 thousand barrels of oil per day to Baghdad, which must send all financial dues to the region.
Observers of Iraqi affairs say that matters should not reach the level of a real crisis, and that it is in their interest for the two parties to reach a satisfactory financial settlement.
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