Iraq is scrambling to restore a northern oil export route that would send crude from the Kirkuk fields directly to Turkey’s Mediterranean port of Ceyhan, as the war involving Iran has effectively shut down the country’s southern export corridor through the Gulf and forced Baghdad into an urgent search for alternative outlets.
According to Reuters reporting, Oil Minister Hayan Abdul-Ghani said Iraq is revamping sections of the Kirkuk-Ceyhan pipeline network so federal crude can flow north without relying on infrastructure controlled by the Kurdistan Regional Government (KRG) in northern Iraq.
The move comes as Baghdad remains locked in a dispute with the KRG over export routes. Earlier Monday, Abdul-Ghani said Iraq had not yet secured Kurdish approval to transport roughly 200,000 to 250,000 barrels per day of Kirkuk crude through the Kurdistan Region’s pipeline to Ceyhan.
Instead, Iraq is preparing to revive its own federal route. Abdul-Ghani said the Iraqi-Turkish pipeline capable of carrying 200,000 to 250,000 barrels per day is undergoing final testing and could begin exporting oil directly from Kirkuk to Turkey within about a week, according to Rudaw.
Related: One Stock To Watch As the Rare Earth War Intensifies
Only about 100 kilometers of the 48-inch Baiji-Fishkhabour pipeline remain to undergo hydrostatic testing. Once completed, crude could be pumped directly from the Kirkuk fields into the system without passing through the Kurdistan Region’s export network.
The pipeline has been largely out of service since 2014 after sustaining heavy damage during the Islamic State’s advance across northern Iraq.
The push to revive the northern route reflects the scale of the export crisis now facing Iraq. Before the regional war escalated, the country was producing just over 4 million barrels per day under an OPEC quota of about 4.4 million bpd. But military operations in the Gulf and the closure of the Strait of Hormuz halted Iraqi oil exports within days of the conflict erupting.
Production has since collapsed to roughly 1.5-1.6 million barrels per day, with output now maintained primarily to supply domestic refineries and power plants.
Baghdad has attempted to improvise emergency export routes, including trucking crude through neighboring countries such as Turkey, Syria, and Jordan. Those shipments total roughly 200,000 barrels per day, which is only a fraction of Iraq’s normal export capacity.
The crisis has also begun to disrupt operations at the country’s northern fields. Iraq’s state-run North Oil Company has taken over operations at four major Kirkuk oil and gas fields–Avana, Bay Hasan, Jambour, and Khabbaz–after BP withdrew staff due to security concerns following the outbreak of the regional war, according to Rudaw.
The takeover allows the state company to run the fields for at least one year to prevent operational disruptions.
BP had previously signed a long-term agreement with Baghdad to redevelop the Kirkuk fields, a project expected to increase oil output by up to 500,000 barrels per day and expand gas investment across the region.
Meanwhile tensions between Baghdad and Erbil have intensified over control of northern export routes, revenue sharing and security in the Kurdish region.
Kurdish officials say the federal government has imposed what they describe as a “suffocating embargo” on the region’s energy sector, while Baghdad has accused the Kurdistan Regional Government of refusing requests to move up to 300,000 barrels per day through the Kurdish pipeline system.
Repeated drone and missile attacks blamed on Iran-aligned armed groups targeting energy infrastructure in the Kurdistan Region have further complicated efforts to restart exports through the northern corridor.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com
- Trump Bombs Iran’s Kharg Island and Threatens to Hit Oil Exports
- Goldman Sachs Hikes Brent Oil Forecast to Over $100 for March
- Hormuz Crisis Sparks Urgent Call to Boost UK Gas Storage
