- Turkey tells Iraq that it will respect the ruling
- Turkey was ordered to pay about $1.5 billion to Iraq
- Iraq is in talks to ensure the export of oil through the port of Ceyhan
- The International Chamber of Commerce ruled in favor of Iraq
(Reuters) – Iraq halted crude exports from the semi-autonomous Kurdistan region and northern Kirkuk on Saturday, an oil official told Reuters, after the country won a long-running arbitration case against Turkey.
The decision to halt shipments of 450,000 barrels per day of crude oil relates to a case from 2014, when Baghdad alleged that Turkey violated a joint agreement by allowing the KRG to export oil through a pipeline to the Turkish port. Jihan.
Baghdad considers KRG exports through the Turkish port of Ceyhan illegal.
The Iraqi Oil Ministry confirmed on Saturday that the International Chamber of Commerce ruled in favor of Iraq.
A source said Turkey had told Iraq it would respect the arbitration ruling.
Turkish Milaha officials have told Iraqi employees of the Ceyhan oil export hub that no ship will be allowed to load Kurdish crude without the approval of the Iraqi government, according to a document seen by Reuters.
A separate document seen by Reuters showed that Turkey then stopped pumping Iraqi crude from the pipeline to Ceyhan.
An official told Reuters that Iraq stopped pumping oil on Saturday through the pipeline that extends from the northern Kirkuk oil fields.
Iraq was pumping 370,000 bpd of KRG crude and 75,000 bpd of federal crude through the pipeline, according to a source familiar with its operations.
A second official at the Ministry of Oil said, “A delegation from the Ministry of Oil will go to Turkey soon to meet energy officials to agree on a new mechanism for exporting northern Iraqi crude oil in line with the arbitration ruling.”
The Iraqi Ministry of Oil said in a statement that Iraq will discuss with the relevant authorities ways to ensure the continuation of oil exports through Ceyhan and state-owned SOMO’s obligations with oil companies.
The Ministry of Natural Resources in the Kurdistan Regional Government said, “The arbitration decision in favor of Iraq against Turkey will not hinder relations with the Baghdad government and the continuation of dialogue.”
The Prime Minister of the Kurdistan Region of Iraq, Masrour Barzani, said in a tweet on Twitter that a delegation from the Kurdistan Regional Government will visit Baghdad on Sunday to discuss energy issues.
The ruling, in which Turkey was ordered to pay Iraq about $1.5 billion before interest, covers the 2014-2018 period, according to a source familiar with the case who spoke on condition of anonymity because they were not authorized to speak to the media.
The second arbitration case, which the issuer expects to take approximately two years, will cover the period from 2018 onwards.
Turkish government officials did not immediately respond to requests for comment.
The source familiar with the process said the final hearing on the arbitration case was held in Paris in July 2022, but it took months for the arbitrators, the Secretariat of the Court of Arbitration and the International Chamber of Commerce to approve the ruling.
Sources said that the impact on oil production in the KRG depends largely on the duration of the Iraqi-Turkish pipeline (ITP) closure, adding that this would cause great uncertainty for oil companies operating in the Kurdistan Region of Iraq.
Halting exports through the pipeline will collapse the KRI’s economy, according to a letter sent last year to US representatives from Dallas-based HKN Energy, which operates in the region.
The letter said Turkey would need to get more crude from Iran and Russia to compensate for the loss of oil in northern Iraq.
Analysts have warned that companies may withdraw from the region unless the environment improves.
Foreign oil companies, including HKN Energy and Gulf Keystone, have linked their investment plans this year to the reliability of payments from the Kurdistan Regional Government, which has been facing delays for months.
(Reporting by Ahmed Rashid in Baghdad, Rowena Edwards in London, and Darren Butler in Istanbul). Editing by Jason Neely, Mike Harrison and Clelia Uziel
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