Expected Iraq Oil Exports Via Turkey's Ceyhan Port, According to a Report
The status of Iraqi Kurdish oil exports through Turkey's Ceyhan Port is approaching a significant resumption after being halted since March 25, 2023. Key details and implications of the proposed agreement and ongoing negotiations are as follows:
### Status and Details
Iraq’s Oil Minister Hayyan Abdul-Ghani announced that crude oil exports via the Ceyhan Port will restart initially at a rate of 185,000 barrels per day (bpd), with plans to gradually increase this volume to the capacity outlined in Iraq’s federal budget. The oil exports utilize the Iraq-Türkiye pipeline, a 970 km route critical for transporting Kurdish oil to the Mediterranean Sea via Ceyhan. This pipeline had been shut for over two years due to unresolved disputes.
Iraq’s parliament approved amendments to the budget law to subsidize production costs for international oil companies operating in the Kurdistan Region, setting transportation costs at $16 per barrel. This financial arrangement is viewed as a crucial step toward resolving the export impasse.
The Association of the Petroleum Industry of Kurdistan (APIKUR) stated that its members are ready to resume exports immediately once guarantees for payment of past and future shipments are secured. APIKUR highlighted that restarting exports could add over 300,000 bpd to the international market and stressed the strategic importance of the Iraq-Türkiye pipeline as a secure export route.
According to local media reports, the KRG is expected to submit an official response to Baghdad regarding a draft agreement that would see the KRG deliver all its crude oil production—approximately 280,000 bpd—to the federal government. In return, Baghdad would supply 50,000 to 55,000 bpd of refined petroleum products for KRG’s domestic use.
Negotiations are taking place amid heightened tensions between Baghdad and Erbil, following the federal finance ministry's decision to freeze all transfers to the KRG over budget share disputes. The freeze on transfers has delayed salaries for more than 1.2 million KRG public employees.
### Implications
The suspension of exports has cost the Kurdistan Region an estimated $25 billion in losses, according to the Kurdish regional prime minister. Resuming exports is critical to reviving the Region’s economy and sustaining public services.
The deal reflects a delicate balance between Baghdad and Erbil, requiring cooperation on oil revenue sharing and production management. This agreement could reduce tensions and improve fiscal stability in Iraq overall.
Reopening the pipeline and resuming exports through Ceyhan provides Iraq with a secure and reliable export route, reducing dependency on other routes like the Strait of Hormuz, which faces regional security threats, especially amid the Iran-Israel conflict.
The addition of over 300,000 bpd to global oil supplies from Kurdistan through Ceyhan would contribute to regional energy security and potentially affect global oil prices by increasing available crude oil volumes.
In summary, Iraq is nearing a framework agreement with the Kurdish authorities and Turkey to restart Kurdish oil exports via the Ceyhan Port, involving coordinated production handover to the federal government and financial arrangements to ensure payment and subsidy coverage. The resumption is highly significant for Iraq’s internal political economy, regional geopolitics, and the global oil market.
The Turkish government, being a key player in this scenario, plays a crucial role in facilitating the resumption of Kurdish oil exports through Turkiye's Ceyhan Port, given the critical Iraq-Türkiye pipeline that transportation takes.
The ongoing negotiations and the proposed agreement between the government of Erdogan, Iraq's federal government, and the Kurdish authorities potentially hold significant implications for the finance and business sectors, especially with the subsidies set for international oil companies operating in the Kurdistan Region.
Reaching an agreement on the resumption of Kurdish oil exports could have strategic repercussions for Turkiye's industry, as the increased flow of crude oil from the Kurdistan Region to the Mediterranean Sea could boost energy security and potentially impact global oil prices.
