Kurdish oil exports stay halted as Iraq negotiates with Turkey

Oil exports from the Kurdistan region of Iraq remain halted as Baghdad negotiates with Turkey’s government in an attempt to reopen a pipeline linking the two countries, said an Iraqi official.

Ankara was ordered last month to pay Iraq $1.5 billion in net compensation by an international business tribunal for allowing crude from Kurdistan to be exported without Baghdad’s consent. Turkey hasn’t commented on the amount, but officials from the country said they want to negotiate the settlement. 

In the meantime, a pipeline that ordinarily moves 400,000 barrels a day from northern Iraq to the Mediterranean port of Ceyhan is shut.

Baghdad is engaged in talks with Ankara, along with parallel negotiations with the Kurdistan Regional Government’s Ministry of Natural Resources, the Iraqi official said, asking not to be named because the information was private. The regional and federal governments of Iraq signed an agreement aimed at reopening the pipeline earlier this month, but some details of how oil from the semi-autonomous region will be sold are unresolved.

While the crude flows are halted, Turkey has said it is carrying out maintenance work on a stretch of pipeline on its side of the border, along with some oil-storage tanks, according to the Iraqi official.

The Turkish government hasn’t yet elaborated on whether it is seeking to reduce the $1.5 billion compensation award, or determine a mechanism for how to make the payments.