It seems that the absence of discussion about oil exports through the Jihan refinery in Turkey from the agenda of talks with Turkish President Recep Tayyip Erdogan during his visit to Iraq has drawn attention to another direction regarding the reason for the postponement, indicating that the problem is entirely confined to only two parties: Baghdad and foreign companies operating in Kurdistan.
With Turkey announcing months ago that the pipeline is ready to resume exports, Iraqi government spokesperson Basim al-Awadhi confirmed today, Tuesday, that resuming exports will take some time due to negotiations with foreign oil companies.
Turkey suspended the export of 450,000 barrels per day from the Kurdistan Region through the Iraqi-Turkish pipeline on March 25, 2023, after the International Chamber of Commerce in Paris issued its ruling in favor of Baghdad in an arbitration case.
Al-Awadhi, on the sidelines of Erdogan’s visit, stated to reporters, “The return of oil exports from Kurdistan to Turkey through the closed pipeline for more than a year will take longer with ongoing negotiations with the regional government and oil producers.”
He added that “talks between companies and the Iraqi Oil Ministry are expected to take some time, especially as Baghdad is working to establish a direct relationship regarding production quantities, exports, and prices,” explaining that “there is no specific timeframe for resolving negotiations with foreign oil companies in the region.”
Meanwhile, informed sources reported today, Tuesday, that “the problem of resuming oil through the Turkish Jihan refinery is confined between Baghdad and foreign companies operating in Kurdistan,” indicating that “companies are demanding adjustments to fixed production costs in the budget.”
Turkish President Recep Tayyip Erdogan arrived yesterday, Monday, in the Iraqi capital Baghdad on his first visit in 13 years, after his last visit when he was prime minister in March 2011, while Iraq signed yesterday with Turkey 26 agreements and memoranda of understanding related to various fields, but the oil file was absent from them.
Oil Minister Hayyan Abdul Ghani revealed on February 20 last year that negotiations with oil companies operating in Kurdistan to resume exports were underway, indicating that they had entered into contracts with the Kurdistan Region on a partnership basis, while the Iraqi constitution prohibits partnership in fields and is about to change these contracts to profit-sharing rather than asset and production.
Iraq, the second-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), exports about 85% of its crude oil through ports in the south of the country, but the northern route through Turkey still represents about 0.5% of global oil supplies.
The Federal Court issued a decision in mid-February 2022 declaring the unconstitutionality of the Oil and Gas Law in the Kurdistan Region and preventing it from exporting oil in its favor, with exports through Baghdad exclusively, based on a lawsuit filed by the federal Oil Ministry.
On June 19, 2023, the capital Baghdad witnessed a meeting between a technical delegation from the Turkish Ministry of Energy and Iraqi officials in the oil sector, discussing the resumption of oil exports from the Kurdistan Region through the Turkish Jihan port, but without reaching any agreement.
