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Iraqi Kurdistan resumes exports to Turkey; Baghdad sees this as ‘illegal’

Iraqi Kurdistan has resumed exports of oil on trucks through Turkey after a two-week halt, industry sources said, a growing trade the central government in Baghdad sees as illegal.

Exports of crude and condensate from the northern autonomous region rose to around 30,000 barrels per day (bpd) before being stopped in mid-January to improve the system for monitoring and metering shipments, the sources said.

“The trucks have started to load small quantities of crude and condensate,” said a source with knowledge of the operation.

Oil exports and contracts are at the heart of a wider dispute over territory, oilfields and political autonomy between Baghdad's Arab-led government and Kurdistan, where ethnic Kurds run their own regional administration.

The Kurdistan Regional Government (KRG) halted exports through the Baghdad-controlled Iraq-Turkey pipeline in December in a dispute over payments to oil companies operating in Kurdistan.

Baghdad insists it alone has the sole right to export oil. The KRG early last month gave permission to Genel Energy to begin direct export of crude to Turkey from the Taq Taq oilfield.

Shipment of condensate, a form of light oil, from the Khor Mor gas field began last summer.

Iraqi Oil Minister Abdul Kareem Luaibi said the ministry intended to sue Anglo-Turkish Genel Energy and other companies for the export of crude from Iraqi Kurdistan.

Ashti Hawrami, the KRG's Natural Resources Minister said exports from the northern region, when restarted, would rise to around 20,000 bpd of crude and 10,000-15,000 bpd of condensate.

The central Iraqi government in Baghdad has repeatedly stated that it considers independent exports from the KRG as smuggling.

The KRG views these exports as part of its 17% entitlement to consume oil in Iraq and says the central government does not provide the northern region with enough oil products such as motor fuels.

Around five cargoes of condensate have already been exported to international oil companies from the Toros terminal near Ceyhan in Turkey.

So far, buyers of Kurdish condensate have faced few repercussions from Baghdad, with one notable exception - trading house Trafigura, which was banned from Iraq in December.

Taq Taq crude oil is being routed to the Turkish port of Mersin and it could take up to two months to build up enough crude to fill up an oil tanker, said an industry source.