Turkey urges US to lift obstacles on KRG oil sales

The Financial Times     By Daniel Dombey in Ankara and Anjli Raval in London

Turkey has called on the US to lift obstacles to the sale of oil by Iraq’s cash-strapped Kurds to help with their battle against the jihadis of the Islamic State of Iraq and the Levant (Isis).

The call, by a senior Turkish official, comes while the US carries out air strikes against Isis in support of the Kurdistan Regional Government, even as officials in Washington discourage international purchases of Kurdish oil for fear such a trade could further fragment the Iraqi state.

“This is urgent: Isis is now selling its oil, but the Kurds are not allowed to sell their oil,” the Turkish official told the Financial Times, referring to oilfields captured by the jihadist group in eastern Syria and around the northern Iraqi city of Mosul.

He claimed Isis was selling cut-price oil to the Syrian government – there are also allegations of widespread oil smuggling from the jihadist-controlled region, notably to Turkey itself – and compared those sales with the legal obstacles faced by KRG exports.

This week, Axeon, a US-based refiner said it would not proceed with a Kurdish buy because it was “controversial” – the latest in a series of rebuffs for tankers circling the globe with shipments of Kurdish oil.

With few buyers for its oil, one Kurdish official said the KRG was now working with Ankara on increasing storage capacity at the port of Ceyhan and elsewhere in Turkey, where the oil is piped before being loaded on to tankers, and was also looking at storing offshore.

Turkey on the frontline of Iraq's Kurdish oil row

AA

A move by Iraq’s Kurdish Regional Government to export 100,000 barrels of oil per day through Turkey is a tactical move brought about by U.S. pressure which could change after April 30 elections in Iraq, experts have told Anadolu Agency.

Baghdad has been opposed to the export of stored Kurdish oil from Turkey's south-eastern port of Ceyhan on the accusation that it violates Iraq’s constitution as it would bypass the country’s national oil company, SOMO.

Currently, 1.5 million barrels of oil are sitting in Ceyhan -- which has a total of storage capacity of 2.5 million -- and are awaiting Baghdad's approval to be exported. 

The KRG has been embroiled in a long-running row with the central government in Iraq over a proposed 17 percent share from oil revenues. The dispute has lead to political boycotts by Kurdish MPs over Iraq’s draft budget with the KRG refusing to withdraw demands, claiming it could never receive its fair share of oil wealth. 

Talks between Irbil and Baghdad have so far failed to find a solution. 

However, in a sudden move, following a phone call on Thursday between KRG President Masoud Barzani and U.S. Vice President Joe Biden, Kurdish authorities revealed that they would accept the export of 100,000 barrels of oil per day through SOMO from April 1 as a "gesture of goodwill" while negotiations for a permanent deal with Baghdad continued. 

Now Turkish, Kurdish and American experts have given AA their analysis on the dispute’s likely outcome.

Ali Semin, from the Istanbul-based think-tank BILGESAM, said the decision was a result of intensified mediation last week by Biden and U.S. ambassador in Baghdad, Stephen Beecroft.  

Turkey, Iraqi Kurdistan sign landmark energy contracts

Reuters

Turkey and Iraqi Kurdistan signed a package of landmark contracts earlier this week that will see the semi-autonomous region's oil and gas shipped to international markets via pipelines through Turkey, sources close to the deal told Reuters on Friday.

The sources said the deals were signed during Kurdistan Regional Government (KRG) Prime Minister Nechirvan Barzani's three hour-long meeting with Turkish Prime Minister Tayyip Erdogan on Wednesday.

The move is likely to further infuriate Baghdad, which claims the sole authority to manage Iraqi oil and which said late on Thursday that any energy deal with Kurdistan would be "an encroachment on the sovereignty of Iraq".

Source:  http://uk.reuters.com/article/2013/11/29/uk-turkey-iraq-oil-idUKBRE9AS06720131129

Iraq Kurds to Pump Oil to Turkey in Truce With Baghdad

Bloomberg        Selcan Hacaoğlu & Onur Ant

Iraq’s Kurds plan to start pumping oil to Turkey next month via a pipeline controlled by the central government in Baghdad, signaling an easing of their dispute over resources, according to two people familiar with the plan.

The new line will take Kurdish oil into the existing pipe that runs from Kirkuk in Iraq to Turkey’s Mediterranean port of Ceyhan, initially carrying 150,000 barrels a day starting in December, according to the Turkish energy industry officials who asked not to be identified because the information isn’t public. An Iraqi energy industry manager, who requested anonymity for the same reason, said the state oil company has accounted for the extra oil in 2014 plans.

Ashti Hawrami, the Kurdish Regional Government’s natural resources minister, said at a press conference last month that the 40-kilometer pipeline will have a capacity of 300,000 barrels a day. Mehmet Sepil, president of London-listed Genel Energy, said at the same conference that the pipeline from Dohuk to Fishkabur on the Turkish border will carry 200,000 barrels a day from its Tawke and Taq Taq fields.

The Iraqi official said the Kurdish oil will be metered when it feeds into the main pipeline, at Fishkabur near the Turkish border, and again when it arrives at Ceyhan.

The agreement signals a truce on the issue between the Iraqi Kurds, who say they should have control over oil and gas resources in the north, and the Baghdad government, which argues that all energy transactions need central approval.

Iraq’s Kurdish region pursues ties with Turkey — for energy revenue and independence

The Washington Post   Ben Van Heuvelen

As the rest of Iraq descends into a crisis of deepening violence, the autonomous enclave of Kurdistan is enlisting the help of an unlikely ally, Turkey, to reach for a long-delayed dream of independence.

In many ways, Iraqi Kurdistan already acts like a sovereign state. Kurdish authorities provide all public services, command their own army and control their own borders — including their heavily guarded southern border with ­Arab-majority provinces of Iraq. In Irbil, the Kurdish capital, most government buildings fly the Kurdish flag — not the flag of Iraq — and many members of the younger generation never learned Arabic and speak only Kurdish.

Until now, however, the Kurds have remained tightly tied to Baghdad because they depend on the Iraqi treasury for the vast majority of their regional budget.

That could soon change.

Putting aside years of hostility, Turkish and Kurdish leaders are quietly implementing an energy partnership agreement, signed earlier this year, that promises to provide the Kurdistan region with an independent stream of oil revenue.

The first major step in the plan is a pipeline that runs directly to Turkey, beyond Baghdad’s reach, and that will begin operating by the end of the year, according to the Kurdistan region’s minister of natural resources, Ashti Hawrami.

“It is our duty as Iraqis to pursue export routes for oil and gas, to secure our future,” Hawrami said.

Turkey, Iraqi Kurdistan clinch major energy pipeline deals

REUTERS        Hümeyra PAMUK & Orhan COSKUN

Iraqi Kurdistan has finalized a comprehensive package of deals with Turkey to build multi-billion dollar oil and gas pipelines to ship the autonomous region's rich hydrocarbon reserves to world markets, sources involved in talks said on Wednesday.

The deals, which could have important geo-political consequences for the Middle East, could see Kurdistan export some 2 million barrels per day (bpd) of oil to world markets and at least 10 billion cubic meters per year of gas to Turkey.

Such a relationship would have been unthinkable just a few years ago, when Ankara enjoyed strong ties with Iraq's central Baghdad government and was deep in a decades-long fight with Kurdish militants on its own soil.

But Turkey imports almost all of its energy needs and growing demand means it faces a ballooning deficit, making the resources over its southeastern border hard to ignore.

During a visit to Istanbul last week by Kurdistan Regional Government (KRG) prime minister Nechirvan Barzani, both sides agreed on the fundamentals of the deals and mapped out technical details for a second oil pipeline and a gas route from Iraq's north to Turkey, sources involved in the talks said.

Iraq Central Government Threatens to Cut Revenue to Kurds Over Pipeline to Turkey

Bloomberg Business Week

Iraq central government threatened to cut oil revenue to the Kurdish north in a deepening standoff over a new export pipeline that companies from DNO International ASA (DNO) to Genel Energy Plc (GENL) plan to use to ship crude from the region.

The government in Baghdad may refuse to give the 17 percent of annual earnings from oil sales allocated to the semi-autonomous Kurdish provinces if they bypass central authorities and start operating a link through Turkey by year-end, Hussain al-Shahristani, deputy prime minister for energy affairs, said in an interview in Dubai yesterday.

“We have our options, and you will hear them when we adopt measures, as this is a big loss for Iraq,” he said. “No Iraqi would accept that they take 17 percent of Iraq’s revenue from crude produced outside of Kurdistan and at the same time all of the revenue of the crude produced in Kurdistan.”

 

The Kurdistan Regional Government halted crude exports through the government-run pipeline in December amid a dispute with the Oil Ministry in Baghdad over the sharing of crude sales revenue and payments owed to companies such as DNO and Genel Energy. The Kurds, who are building export pipelines as a step toward self-sufficiency, estimate their oil reserves at 45 billion barrels.

The Iraqi government insists that the Kurds link their new crude export pipeline to the main government pipe at a metering station near the Turkish border, Shahristani said.

“They refused and said they want to link it after the metering station to prevent the Iraqi government from knowing the quantity of crude they are exporting,” he said. “The real problem is that they don’t want anyone to know how much they are producing and selling.” 

Anglo-Turkish company discovers new oil in KRG

Hurriyet Daily News

Genel Energy, Anglo-Turkish oil and gas independent, has announced that it has discovered new commercial oil reserves in northern Iraq.

In a written statement yesterday, Genel Energy confirmed the existence of a commercial oil discovery in the Ber Bahr 1 exploration well in the Kurdistan Region of Iraq (KRG).

“The Ber Bahr well adds a further commercial oil discovery to Genel’s already significant KRI resource base,” the statement said. The company plans to begin a phased development of the field in the second half of this year. Genel Energy holds a 40 percent working interest in Ber Bahr. Gulf Keystone Petroleum Ltd holds a 40 percent working interest and the KRG holds the remaining 20 percent interest.

Genel Energy now operates in seven sites in the KRG, including Chia Surkh, Dohuk, Miran, Bina Bawi, Taq Taq, and Kewa Chirmila. However, there is a long-running dispute between the central government in Baghdad and the autonomous KRG over how to develop the country’s resources.

Source: http://www.hurriyetdailynews.com/anglo-turkish-company-discovers-new-oil-in-krg.aspx?pageID=238&nID=47921&NewsCatID=348

Turkey offers pipelines to Cyprus, Israel, Iraq

Hurriyet Daily News

Israeli and Greek Cypriot officials and representatives of Turkish Cyprus all agree on the reality that natural gas produced in the eastern Mediterranean will get its utmost feasibility by a pipeline passing through Turkey, Energy Minister Taner Yıldız tells the Daily News

Energy-hungry Turkey has offered to cooperate with its oil and gas-rich southern neighbors for the exploration and transportation of their hydrocarbon products to world markets via Turkey. It has particularly called out to Israel and Cyprus, which recently had problems over the legality of the licenses issued for petroleum exploration in the eastern Mediterranean. 
“Israeli officials, local officials in Greek Cyprus and representatives of the TRNC [Turkish Republic of the Northern Cyprus], they have all agreed on one reality: The natural gas to be produced from this region will get its utmost feasibility by a pipeline that will pass through Turkey. All relevant figures prove this idea,” Energy Minister Taner Yıldız told the Hürriyet Daily News in a comprehensive interview outlining the Turkish government’s energy policies regarding oil and gas reserves of its southern neighbors.

Yıldız held substantial meetings with acting Secretary of Energy Daniel Poneman and U.S. President Barack Obama’s special envoy for energy issues Carlos Pascual last week in Washington. The meetings were crucially important as the two allies found themselves on opposite sides on a number of issues related to Baghdad-Ankara tension over the latter’s growing interest in making deals with the Kurdistan Regional Government and to the Turkey-Cyprus quarrel over the Greek Cypriot government’s ambitious moves for oil exploration in the disputed areas of the Mediterranean.

Turkey-Kurdish oil deal reflects end of post-Ottoman order

David Gardner      Financial Times

Confirmation last week that Turkey plans to buy into the oil and gas wealth of the self-governing Kurdish region of northern Iraq has led to warnings – most stridently from the US – that Ankara is gambling with the break-up of Iraq. Indeed. But there is more at stake than that. Drop a rock in any pool in this febrile region – now hyperconnected in all the wrong ways – and the ripples will reach every shore.

In Iraq, the Kurdistan Regional Government and the national authorities in Baghdad are nowhere near a pact for sharing the country’s potentially huge oil revenues, much less a working model of federal power-sharing – with the Baghdad government of Nouri al-Maliki, a Shia Islamist aligned with Iran, invariably favouring sect and faction above state and nation.

But the future of Iraq is now just part of a discussion about the possible break-up of bits of the Middle East, given new urgency by the disintegration of Syria under the pulverising effect of two years of civil war.

That conflict has prised loose the Kurdish region of northeast Syria, galvanising Turkey into making peace with its own Kurds and drawing Iraqi and Syrian Kurds into an economically dynamic Turkosphere.

That this debate is only just starting suggests just how problematic it is – and how immense its possible consequences. What is in play is the state system that succeeded the Ottoman Empire almost a century ago in Syria and Mesopotamia.

Turkey, Iraq warm to new pipeline as supply surges

Today's Zaman

Turkey reiterated its willingness to build a new pipeline in cooperation with energy-rich Iraq for a second time in less than a week after Iraqi Prime Minister Nouri al-Maliki made statements aimed at breaking the ice with Ankara following months of hostile rhetoric.

 

The statements come at a time of new oil discoveries in Iraq with the existing pipeline infrastructure starting to fall short of meeting overseas demand, undermining the war-torn country's potential to boost energy exports incomes. Ankara and Baghdad have been at odds over a disagreement between the two to export northern Iraq's oil via Turkish markets. The latest developments, however, enhanced the chance for reconciliation between the two with the central government in Baghdad appearing to be less skeptical about Ankara's engagement with the autonomous Kurdistan region -- or Kurdistan Regional Government (KRG) -- to the north. Resource-hungry Turkey has heavily courted Iraqi Kurds regardless of the strife with Baghdad and continues doing so.

In an op-ed article published in Washington Post to mark the 10th year of US invasion in Iraq, Maliki said Baghdad “is committed to good relations with all our neighbors … offering the hand of friendship to Jordan, Turkey, Saudi Arabia and Kuwait.” Turkish energy minister Taner Yıldız said in Ankara on Wednesday that the government “is ready to cooperate in building a new pipeline that could serve as an alternative to an existing Baghdad-controlled Kirkuk-Yumurtalık pipeline to Turkey.” Exports via that channel dried up in December -- from a peak of around 200,000 barrels per day (bpd) -- due to a row with Baghdad over payments. Last month Yıldız said the Baghdad government has offered to build a pipeline from the Iraqi oil site of Basra to Ceyhan.

Turkey seeks deeper energy relationship with Iraq and KRG

Orhan Coşkun     Reuters


Turkey would play an active role in any arrangement in Iraq under which crude oil export revenues are shared between the central government and the northern Iraqi Kurdistan region, Energy Minister Taner Yildiz said on Thursday.

Yildiz told Reuters in an interview Turkey stood ready to support an arrangement under which 83 percent of oil export revenue went to Baghdad and the remaining 17 percent went to the government of the autonomous Kurdistan region.

"There is nothing on this issue that would unsettle the Iraqi central government," Yildiz said.
"Turkey would play an active role in giving the 17 percent to northern Iraq and 83 percent to the Iraqi central government."

Oil lies at the heart of a long-running feud between the central government and the autonomous Kurdistan region. Baghdad says it alone has the authority to control exports and sign contracts, while the Kurds say their right to do so is enshrined in Iraq's federal constitution.

The Kurdistan Regional Government (KRG) started on the path towards economic independence early this year by exporting small volumes of crude oil by truck to Turkey.

Iraqi Kurdistan offers improving business environment; tensions with Baghdad remain – country risk report

Maplecroft    Country Risk Report for Iraq

Maplecroft’s Country Risk Report for Iraq focuses on the primary risks to oil and gas companies operating in Iraqi Kurdistan. The report includes in-depth analysis of current political dynamics, including tensions between Erbil and Baghdad, security concerns, legal and regulatory challenges, the human rights and labour rights situation and environmental issues.

Iraq is facing a year of political uncertainty and potential instability. In Iraqi Kurdistan, the relationship between the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic Party (KDP) is souring. Meanwhile, an increasingly hostile and intractable confrontation between Erbil and Baghdad over contested territory and Kurdish issuance of oil contracts remains a source of concern for investors. Tensions peaked in November 2012 when both the KRG and federal authorities sent thousands of troops to a disputed border in the Diyala governorate. A de-escalation of the military stand-off has yielded progress but political statements regarding the incident remain vitriolic.

Oil and gas companies have good reason to be interested in Iraqi Kurdistan. Long-term indications suggest that crude production from the north of the country will constitute a rapidly growing share of overall national output, rising from 6.6% in 2012 to 33% by 2020. However, considerable challenges remain, not least the inability of Erbil and Baghdad to agree on the terms of exploration contracts.

Iraqi Kurds woo more oil majors in contest with Baghdad

Julia Payne & Simon Falush       Reuters

Iraqi Kurdistan said it is negotiating with two or three major international companies to operate oilfields and expects to announce the outcome in about a month, in a move likely to further heighten tensions with Baghdad.

The remarks by Natural Resources Minister Ashti Hawrami on Tuesday highlight the autonomous region's resolve to push ahead with development of its oil resources independently of the Baghdad-based central government.

Kurdistan has upset the central government by signing deals directly with oil majors such as Chevron Corp and Exxon Mobil, providing lucrative production-sharing contracts and better operating conditions than in the south of the country.

Last week Hawrami said Kurdistan, which is in the north of Iraq and has run its own administration and armed forces since 1991, had awarded Chevron a stake in the Qara Dagh oil block.

"We are negotiating with two to three other significant companies. They will hopefully be announced in a month or so," Hawrami told reporters on the sidelines of a conference in London.

He also said Exxon Mobil's contentious deal to operate in the autonomous region was on track.

Iraq, Kurds, Turks and oil: A tortuous triangle

The Economist

The governments of Turkey, Iraq and Iraqi Kurdistan play a dangerous game

SNAKING their way from Kirkuk, a city 240 kilometres (150 miles) north of Baghdad, through Kurdistan and across Turkey’s eastern region of Anatolia to the Mediterranean are pipes that once carried 1.6m barrels a day (b/d) of Iraqi oil to the global market and yielded fat transit fees to Turkey along the way. The infrastructure underpinned the two countries’ mutual dependence. But nowadays the balance of power has shifted. A third party, the Iraqi Kurds, has changed it. It is unclear who will emerge on top. But Iraq’s central government in Baghdad is on the defensive.

Wars, saboteurs and, since the 1990s, economic sanctions have left the Iraqi sections of the pipeline system in a mess. Barely a fraction of its capacity is used. One of the two parallel lines stands empty and the source that once fed them, the giant Kirkuk oilfield, is dilapidated. The oil ministry in Baghdad has vague ideas about revamping the pipeline, perhaps to carry crude extracted near Basra, in the far south, though this would need an expensive new pipeline to link both ends of the country.

But Turkey is hatching a different plan for its section of the Kirkuk-to-Ceyhan pipeline. Its souring relations with the government in Baghdad have spurred it to cultivate new ties with the Iraqi Kurds’ regional government in Erbil, which oversees the oil and gas that Turkey’s growing economy craves. A wide-ranging energy deal is in the works that will see state-backed Turkish firms and Western oil majors plough money into Kurdish infrastructure and oilfields, connecting them to Turkey and the world beyond. The deal could eventually allow for up to 2m b/d of Kurdish oil exports to go through Turkey.

Last year, trade between Turkey and Iraqi Kurdistan amounted to $8 billion. Turkish money has paid for pristine airports in Erbil and Dohuk, an Iraqi Kurdish city further north, and for other large projects. Not long ago, Turkish politicians, wary of their own large and restless Kurdish minority still fighting for autonomy (or more) in eastern Turkey, barely acknowledged Iraq’s autonomous Kurdish region.