Iraqi Kurdistan faces $4 billion losses amidst halting of oil exports
The Iraqi Kurdistan region has suffered substantial financial setbacks, with losses amounting to $4 billion due to the suspension of oil exports. The Association of the Petroleum Industry of Kurdistan (APIKUR) has disclosed that the closure of the crucial Iraqi oil export pipeline to the Turkish port of Ceyhan has inflicted significant economic damage on both oil producers and the Iraqi government.
APIKUR, an association comprising foreign and local oil production companies, indicated that despite initial discussions between the Iraqi and Turkish governments aimed at resolving the ongoing issue, the losses are projected to persist.
The halt in oil flows has led to a reduction in oil production among northern Iraqi producers, a consequence of Turkey’s decision to cease the transportation of 450,000 barrels per day through the pipeline on March 25.
This cessation of oil exports from the Kurdistan region has had a considerable impact on the Kurdistan Regional Government (KRG), causing the region to incur billions of dollars in losses. Turkey’s move to suspend oil exports was triggered by an arbitration ruling from the International Chamber of Commerce (ICC) in Paris.
The ICC decision compelled Turkey to pay Baghdad $1.5 billion in compensation for damages stemming from the KRG’s unauthorized export of oil between 2014 and 2018, a move that Baghdad deemed illegal.
The KRG had initiated independent crude oil exports in 2013, a move that Baghdad had regarded as against the law. Notably, APIKUR made it clear that its member companies would not resume oil production even if a resolution was reached between the government and Turkish authorities.
APIKUR conveyed that it will only agree to restart oil exports through pipelines once there is a confirmed arrangement safeguarding the rights of international oil firms to receive due payment for both past and future oil exports.
In a recent development, the Iraqi Minister of Oil, Hayan Abdul-Ghani, engaged in discussions with Turkey’s Minister of Energy and Natural Resources, Alparslan Bayraktar, in Ankara.
The two officials underscored the importance of the oil pipeline between Iraq and Turkey and highlighted the necessity of resuming crude oil flows after completing essential rehabilitation work. The Turkish side deemed these measures crucial following a seismic event that struck Turkey in February.