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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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    After months of suspension and years of disputes.. What is the Iraqi-Turkish oil line?

    Rocky
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    After months of suspension and years of disputes.. What is the Iraqi-Turkish oil line? Empty After months of suspension and years of disputes.. What is the Iraqi-Turkish oil line?

    Post by Rocky Mon 02 Oct 2023, 8:55 am

    After months of suspension and years of disputes.. What is the Iraqi-Turkish oil line?
    • Time: 10/02/2023 13:56:08
       
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    {Economic: Al-Furat News} After a hiatus that lasted for more than seven months, the Iraqi oil pipeline will resume operation during this week, according to what Turkey announced on Monday.
    The Turkish Minister of Energy, Alp Arslan Bayraktar, revealed that the operation of the Iraqi pipeline “will be able to transport about half a million barrels to global markets.”
    Iraqi-Turkish oil pipeline
    Iraq, which is the second largest oil producer in OPEC after Saudi Arabia, has the fifth largest proven oil reserves in the world, amounting to 145 billion barrels, representing 17 percent of the reserves in the Middle East, according to the US Energy Information Administration (EIA).
    The Iraq-Turkey pipeline was developed to help the country export more than one million barrels of crude oil per day to the Mediterranean region via the Turkish port of Ceyhan.
    The two sides signed the agreement to operate the line in 1973, and made updates to it in the years 1976 and 1985, until 2010, the year in which the agreement was extended.
    The signed agreement stipulates that the Turkish government "must comply with the instructions of the Iraqi side regarding the movement of crude oil coming from Iraq in all storage and disposal centers and the final station."
    Years of disagreements
    Tensions began between Ankara and Baghdad over the issue, as a result of disagreements between Kurdistan and the federal government over the management of the natural resources file, especially after 2007, when the region issued the oil and gas law, which was followed by the establishment of several companies to explore, produce, refine and market oil.
    During the following years, the Kurdistan region of Iraq concluded a group of contracts with foreign companies for exploration and extraction of oil, without the approval of the federal government, which Baghdad considers its right under the constitution.
    Since early 2014, Ankara has allowed the Iraqi Kurdistan Regional Government to export oil independently of the federal Oil Ministry, by linking Kurdish pipelines to the line coming from Kirkuk in the Iraqi Kurdistan border town of Fish Khabur.
    The move enabled the Iraqi Kurdistan government to sell its oil directly to the market and keep the revenues, in a step that Baghdad considered illegal, while the Kurds considered it compensation for the withheld salaries. According to an analytical paper by Mike Nets, a fellow at the Washington Institute for Near East Policy.
    Despite the dispute over this oil, its attractiveness was great for importers in the region, especially since Erbil was selling it at a discount ranging between 15-18 dollars according to 2022 data, according to the analysis.
    The same source pointed out that despite the region's losses in revenues due to the discount rates, it "did not submit to Baghdad," which burdened Kurdistan's financial resources with billions of dollars in debt.
    It was also previously agreed that the Kurdistan region would deliver 250,000 barrels of oil per day to be exported from Baghdad, in exchange for a share of the general budget paid as salaries to government employees and other expenses.
    But Erbil never delivered oil, and payments from Baghdad were irregular, according to an analysis as well. 
    In May 2014, this dispute prompted the Iraqi Oil Marketing Company to file an arbitration case with the International Chamber of Commerce, on behalf of the Ministry of Oil. 
    Baghdad considered that Turkey had violated the signed pipeline agreement by importing oil from Iraqi Kurdistan without the permission of the Iraqi state. 
    Last March, the International Chamber of Commerce ruled that Turkey must pay Baghdad $1.5 billion in compensation, based on a condition in the 1973 agreement stipulating that Turkey would only buy oil through the Iraqi government oil marketing company, according to Foreign Policy.
    Consequences of the decision
    Since then, Turkey has stopped the transit of about 350,000 barrels per day of crude oil from the Kurdistan region and Kirkuk fields via the pipeline that reaches global markets through the Turkish port of Ceyhan, after a ruling in an arbitration case issued by the International Chamber of Commerce ordered Ankara to pay compensation to Baghdad for... Unauthorized exports by the Kurdistan Regional Government of Iraq between 2014 and 2018.
    Turkey then began maintenance work on the pipeline, which is more than 900 kilometers long and passes through a seismically active area, after it said it was damaged by the earthquake that struck the country in February.
    Before its operations stopped, the pipeline transported about 80,000 barrels per day of crude oil exports from Kirkuk Governorate and about 390,000 barrels per day of exports from Iraqi Kurdistan, which enjoys semi-autonomy, according to the Intelligence Energy website.
    Turkey's suspension of the transportation process cost Baghdad and Erbil about $5 billion of their total revenues through this line, until late August, while Ankara's losses ranged between $2 and $3 million per day from oil transit fees on its territory, according to figures from the Middle East Institute.
    Although they constitute only 0.5 percent of global supplies, the cessation of crude exports through the Kirkuk-Ceyhan pipeline caused an increase in oil prices, returning to levels of $80 per barrel in March.
    At the end of this, the Iraqi federal government and the autonomous Kurdistan Region signed their temporary oil agreement in April, stipulating that Baghdad would undertake the process of fully supervising the export of oil from the region’s fields.
    Last May, the Iraqi Ministry of Oil asked oil and gas companies operating in the Kurdistan region to sign new contracts with the state-owned marketing company (SOMO) instead of the regional government.
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