A year after the cessation of the Iraq-Turkey oil pipeline, once a crucial conduit handling about 0.5% of global oil supply, efforts to resume operations remain stalled due to legal and financial complexities, report sources to Reuters.
Previously, approximately 450,000 barrels per day of crude flowed through Iraq’s northern oil export route via Turkey. Its closure has resulted in significant financial losses estimated at $11 billion to $12 billion for Iraq, according to the Association of the Petroleum Industry of Kurdistan (APIKUR).
Discussions regarding a restart are currently off the table, according to one source familiar with the situation.
The cessation occurred on March 25, 2023, following an arbitration ruling that found Ankara violated terms of a 1973 treaty by supporting oil exports from Kurdistan without Baghdad’s consent. Legal disputes between the nations persist, with ongoing arbitration cases and financial obligations.
Iraq remains obligated to make minimum payments to Turkey as long as the pipeline is technically operational, theoretically serving as an incentive for resuming flows. However, amidst Iraq’s reduced oil exports as part of OPEC+’s strategy, restarting northern flows is not a priority.
The strained relations between the Iraqi government and the Kurds, compounded by geopolitical tensions, further complicate the situation. Despite attempts by the United States to facilitate negotiations, global distractions like conflicts in Ukraine and Gaza have hindered progress.
International oil companies operating in Kurdistan, affected by the pipeline closure, continue to seek compensation in accordance with their contracts. However, formal proposals or agreements to restart exports are yet to materialize from Iraqi or Kurdish officials.
Despite ongoing discussions, APIKUR and its members have not received concrete resolutions, underscoring the prolonged impasse in restarting operations.
