Pipeline disruption will continue until Ankara, Baghdad and the KRG reach an agreement to resume exports

Kurdish-Iraqi oil production at risk after Turkish gas substructures shut down

photo_camera AFP/HAIDAR MOHAMMED - Oil refinery in Iraq

After a disruption in exports from the north forced companies operating there to halt production or divert crude to storage, where capacity is low, the Kurdistan Region of Iraq's (KRI) oil production is in jeopardy. A cut in an export pipeline from northern Iraq's oil fields forced the country to stop exporting approximately 450,000 barrels of crude oil per day (bpd), or 1.7% of the world's daily production, to the KRI from the Iraqi city of Kirkuk to the Turkish port of Ceyhan. The pipeline disruption will continue until Ankara, Baghdad and the KRI reach an agreement to resume exports, leaving the region's oil companies in a precarious situation.

 atalayar-kurdos-siria-irak-iran-turquia-pertroleo-economia-energia

The subjugation of the Kurdish population to all kinds of atrocities by neighbouring countries has led to the Kurdish people's constant isolation and fear. Although the Kurdistan region is not officially a country, it enjoys a certain political status that allows it to make its own decisions, but always with Baghdad's eye on it. The Kurdish region is located in Turkish, Iranian, Iraqi and Syrian territory and borders Armenia. With no outlet to the Black Sea, Kurdistan's economy is extremely dependent on oil exports. 

To better understand the conflict between neighbouring countries and the semi-autonomous Kurdistan region, 74% of Iraq's reserves are on Kurdish soil, 20% of Iran's and all of Syria's and Ottoman oil. With a total of approximately 20 million, the Kurdistan region holds about 30% of total oil production. 

 atalayar-petroleo-irak-kurdistan-turquia-iran-siria-economia-energia

Immediately after Iraq, according to the International Court of Arbitration of the International Chamber of Commerce, won an arbitration case alleging that Turkey had violated a joint agreement by allowing the Kurdistan Regional Government (KRG) to export oil to Ceyhan without Baghdad's approval, Turkey stopped extracting Iraqi crude from the pipeline. If a resolution is not reached within a week, Dallas-based HKN Energy, which manages the Sarsang block, said it would cease operations. This is because its storage facilities are almost full. The block produced 43,038 bpd during the fourth quarter of last year. With Brent rising more than $3 a barrel on Monday, the news helped support black gold prices. 

 patroleo-irak-kurdistan-kurdos-siria-iran-turquia-economia-energia

As storage neared full capacity, Forza Petroleum, a Canadian company formerly known as Oryx Petroleum Corporation, announced on Monday that it would halt production from the 14,500 bpd Hawler licence at KRI. Last year, HKN sent a letter to US lawmakers warning them that stopping exports through the pipeline would bring down KRI's economy. Gulf Keystone Petroleum, the company that manages the 55,000 bpd Shaikan field in KRI, said in a statement on Monday that its "facilities have storage capacity to allow production to continue over the next few days at a reduced rate, after which the company will suspend production". 

The oil is being held in tanks, each of which can hold several days of production, according to DNO and Genel Energy. The Tawke and Peshkabir fields, which produced 107,000 bpd of oil last year, are sites where the two companies own commercial assets. Genel Energy also has stakes in the Taq and Sarta fields, which, according to the company's annual results, produced 4,500 bpd and 4,710 bpd equally last year. According to sources consulted by Asharq Al-Awsat media, in relation to field operations, production at the Khurmala oil field, operated by the Kurdish Kar group, was affected by approximately 135,000 bpd and is on the verge of collapsing.

 atalayar-petroleo-irak-kurdistan-siria-turquia-iran-energia-economia

In a statement, Shamaran Petroleum said: "The company will continue to closely monitor this situation and will remain in close contact with the other oil producers in the Kurdistan Region, as well as relevant government officials". 

More in Economy and business