Iraq-Turkey oil pipeline ready to resume operations soon

Pipeline contributes about 0.5% of global oil supply

ANKARA:

Iraq’s northern oil export route through Turkey will soon be ready to resume operation after checks on pipeline maintenance and repairs to flood damage, the Turkish energy minister said.

A survey of the oil pipeline is complete and it will soon be “technically” ready for operation, Alparslan Bayraktar said.

Turkey halted flows on Iraq’s northern oil export route on March 25 after an arbitration ruling by the International Chamber of Commerce (ICC) ordered Ankara to pay Baghdad damages for unauthorised exports by the Kurdistan Regional Government (KRG) between 2014 and 2018.

Turkey then started maintenance work on the pipeline, which goes through a seismically active zone and which it says has been damaged by floods.

“As of today, the independent surveyor completed their survey and now they’re preparing their report,” Bayraktar said without mentioning a date for resumption of oil flows, in an embargoed press briefing held by the ministry on Thursday.

Iraq and Turkey previously agreed to wait until maintenance works were complete before resuming the pipeline that contributes about 0.5% of global oil supply. Sources said oil flows are not expected to start before October, with KRG losing roughly $4 billion in lost exports.

Turkey also calculates Iraq owes $950 million as a result of ICC arbitration, net of damages Turkey has to pay Iraq.

Ankara will also file in the Paris court for a “set-aside case”, Bayraktar said. Iraq opened an enforcement case against Turkey in a US federal court in April, to enforce a $1.5 billion arbitration award.

“As two neighbouring countries, we need to find an amicable solution. But from the legality perspective, we need to take care of our interests. Most likely in the future we might face another court challenge. But the pipeline will be operational technically. It is more or less ready and we will start the operation soon,” Bayraktar said.

Ankara wants Baghdad to withdraw a second arbitration case covering the period from 2018 onward, and negotiate a reduced payment. Turkey also wants Erbil and Baghdad to agree on a common position and negotiate the continuance of the pipeline agreement, which is set to expire in 2026.

Published in The Express Tribune, September 16^th, 2023.

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