The volume of crude from the northern Iraq region of Kurdistan being held in tanks at Turkey’s Mediterranean oil hub of Ceyhan has reached 1 million barrels, Turkish energy minister Taner Yildiz told reporters Wednesday in a press conference televised live on Turkey’s CNBCE business news channel.
Yildiz stated that the crude is being held “in the name of Iraq,” but did not mention how much storage space was available to hold crude from the Kurdistan region before it would become necessary to allow exports to start, nor whether Turkey will allow exports to start or will continue to store the oil until an agreement is reached between the Iraqi central government in Baghdad and the Kurdistan Regional Government (KRG) in Erbil.
Replying to a question on the status of negotiations between Baghdad and the KRG over oil from the region which has since December been flowing to Ceyhan via the Kirkuk-Ceyhan oil line, Yildiz said that he understood an agreement had been reached over the $2.5 billion that the KRG is owed from the central government budget.
Yildiz added that Turkey has invited Iraq’s deputy prime minister with responsibility for energy Hussain al-Shahristani and oil minister Abdul Karim Luaibi to a conference in Ankara next month and is awaiting their reply.Crude from the KRG region has been flowing to Ceyhan through one of the two parallel pipelines which make up the 1.6 million b/d Kirkuk-Ceyhan pipeline since December last year.
Turkish officials told Platts in January that continuous flow through the line has not been possible because both parallel lines feed into the same feeder connected to the tank farm, meaning that it is not possible to allow simultaneous flow through both lines without the two crudes becoming mixed.
As a result flow of crude from Kurdistan has only been possible during periods when flow of Iraqi crude from Kirkuk has been halted.
Officials also denied that Turkish pipeline operator Botas which operates the site had set aside a specific amount of tank capacity for Kurdish crude but did confirm that Botas has a contracted obligation to store the Iraqi crude arriving at the terminal which it does not have for the Kurdish crude.
The existing Botas operated tank farm at Ceyhan has a capacity of 9.5-10 million barrels.
Turkish petroleum distributor Starpet told Platts last week that it is planning to construct a 300,000 cubic meter (about 1.9 million barrels) capacity tank farm at Ceyhan specifically to hold crude arriving from the Kurdistan region of northern Iraq via the Kirkuk-Ceyhan oil line.
A company spokesman told Platts the tank farm will be constructed on a 300 hectare site close to Botas’ Ceyhan terminal at a cost of $120 million, with construction expected to take one year once a final investment decision is taken.
The company submitted an environmental impact study for the facility last year and expects to receive approval for the project in March, he said.