Plans to resume oil exports from Iraqi Kurdistan are on hold due to ongoing repair work on a pipeline running from the Kirkuk oil fields to Turkey, the regional government said in a statement.
Kurdistan said last month it would begin exporting 100,000 barrels per day from April 1 through Iraq’s official pipeline network as a “gesture of goodwill” to ease a dispute with the federal government in Baghdad.
But the Kurdistan Regional Government said the federal Oil Ministry had advised that it was “not yet ready” to receive any crude because of damage to the pipeline from Kirkuk to the Turkish port of Ceyhan, which has been repeatedly sabotaged over the past year.
“It has been agreed that as soon as the repairs to the pipeline are finished, the KRG shall begin to export from the region,” the statement said.
Industry sources, however, say the Kurds could in theory bypass the damaged stretch and feed oil into the pipeline where it passes through their territory, before crossing the Turkish border.
The proposal to export via the federal pipeline marked a breakthrough in months of U.S. shuttle diplomacy and tortuous negotiations over oil exports from the autonomous region, which Baghdad wants to keep under its control.
Iraq’s Deputy Prime Minister for Energy Hussain al-Shahristani publicly welcomed the initiative, but an oil official Tuesday said it had been dismissed from the outset.
“We did not even sit to discuss their proposal, and talking about 100,000 barrels is not a solution to a complicated issue like this,” the official told Reuters on condition of anonymity.
Crude from Kurdistan used to flow through a Baghdad-controlled pipeline to the Turkish port of Ceyhan, but exports via that channel dried up more than a year ago due to a dispute over payments for oil companies operating in the region.
Since then, the Kurds have trucked smaller quantities of oil across the border while building their own separate pipeline to Turkey in defiance of Baghdad, which retaliated earlier this year by cutting the region’s monthly budget allocation.
More than 1 million barrels of oil have already flowed through the new Kurdish pipeline into storage tanks at Ceyhan, but Ankara has sought Baghdad’s blessing before allowing exports to begin.