Iraq to reopen own pipeline as Kurdish talks stall

Baghdad is repairing a pipeline that could allow it to send 350,000 barrels per day (bpd) to Turkey by the end of the month, an Iraqi deputy oil minister said on Monday, a step likely to rile oil foreign companies and the Kurdistan Regional Government (KRG).

The reopening of the Kirkuk-Ceyhan pipeline, which has been shut for a decade, would provide a rival route to a pipeline from the Kurdistan region that has been shut for a year as talks between Baghdad and the KRG on resuming exports have stalled.

Baghdad deems production-sharing agreements between the Kurds and foreign companies using the KRG's pipeline illegal.

The federal government in Baghdad will require oil companies to negotiate with it to sell their oil via the revived pipeline to Turkey, potentially angering the Kurds, who rely almost entirely on oil revenue.

Exports via the 960 km (600 miles) pipeline were halted in 2014 after repeated attacks by Islamic State militants. It once handled about 0.5% of global supply.

"Repair works are ongoing, and a major crude pumping station with storage facilities has been completed. The pipeline is likely to be operational and ready to restart flows by the end of this month," Basim Mohammed, Iraqi deputy oil minister for upstream affairs, told Reuters.

Repairing damaged sections inside Iraq and completing one essential pumping station will be the first stage of operations to bring the pipeline back to full capacity, he said.

Iraq hopes to host Gulf Arab monarchs and other Middle Eastern emissaries in the hotel's 470 luxury rooms and suites when they arrive for a planned Arab League summit next year.

The KRG's pipeline was halted on March 25, 2023, after an arbitration court ruled it violated provisions of a 1973 treaty by facilitating oil exports from the semi-autonomous Kurdish region without Baghdad's consent.

Negotiations to restart it have faltered as Turkey, the KRG, and the federal government have made conflicting demands.

Two Iraqi oil officials and a government energy adviser, speaking on condition of anonymity, said Baghdad had balked at a Kurdish demand that the federal government pay a $6 per barrel transit fee to Russian oil firm Rosneft, which partly owns the pipeline.

"Iraqi oil ministry officials told the Kurdish negotiating team they consider the agreement between KRG and Rosneft illegal and a violation of valid Iraqi laws," said Kurdistan region-based energy adviser Bahjat Ahmed, who was briefed about the talks.

A KRG spokesman did not reply to requests for comment.

Reuters