Iraqi Kurds await ‘final deal’ on Turkish crude exports

Officials in Iraqi Kurdistan say Baghdad is still waiting to reach a “final agreement” with Ankara to resume oil exports to Turkey, where the results of a tightly contested presidential election hang in the balance, Agence France-Presse reported.

After defying Baghdad and independently exporting crude through Turkey for nearly a decade, Iraq’s autonomous Kurdish region was forced to halt its lucrative sales in March, following international arbitrators’ ruling in favor of Baghdad’s exclusive rights over exports.

An April deal between Baghdad and Arbil, the capital of Iraqi Kurdistan, looked to clear the way to restart production but, despite Iraqi officials saying last week they should resume on May 13, the oil has so far not flowed.

“Kurdistan has fulfilled all its obligations … and is awaiting a final agreement between the federal government and the Turkish government for a resumption of oil exports,” Kurdish Prime Minister Masrour Barzani said in a statement Sunday.

Lucrative crude sales were Kurdistan’s economic lifeblood, with 475,000 barrels exported daily via the Turkish port of Ceyhan.

The suspension of exports represents a shortfall of around “one billion dollars,” analyst Kovand Shirwani told AFP.

April’s agreement will see Baghdad’s State Oil Marketing Organization (SOMO) manage sales of oil pumped from fields under Kurdistan’s control, with revenues paid into a bank account that will be overseen by Baghdad. Arbil will also receive a share of the federal budget.

As Baghdad is waiting for exports to resume, it is also expecting Ankara to pay a $1.8 billion “fine” after the arbitration ruling, a senior oil ministry official speaking on the condition of anonymity told AFP.

Under a 1973 agreement on oil exports between Baghdad and Ankara, Iraqi export fees paid for each barrel of oil sent to Ceyhan were set at $1.19.

“However, Kurdistan paid much more than that,” Iraq’s oil minister Hayan Abdel Ghani said in early May. “The difference must go to the Iraqi government.”

In late March, Turkish energy minister Fatih Dönmez challenged the claims that Ankara should pay compensation to Baghdad, state news agency Anadolu reported.

Analysts say any decision by Turkey to resume purchases of Iraqi oil is awaiting the outcome of the country’s elections.

“I think the elections are postponing the resumption. Turkey will resume the oil exports after the election has settled down,” political analyst Lawk Ghafury said, adding that Baghdad’s claims for compensation from Ankara should not prove a significant stumbling block.

“I don’t think Iraq will be very tough when it comes to the compensations,” Ghafury, a former official from the Kurdistan regional government, said.