Iraqi Kurds, Turkey to double oil export pipeline capacity

ALI BERAT MERIC and SELCAN HACAOGLU

ANKARA, Turkey (Bloomberg) -- The Kurdish regional government in Iraq and Turkey are working to at least double the capacity of a pipeline that allows the Kurds to export crude oil, Turkish Energy Minister Taner Yildiz and an industry official said.

A second pump has been installed near Fishkabur in the semi-autonomous Kurdish region to speed up the injection of Kurdish oil into the main Iraq-Turkey pipeline, according to the industry official with knowledge of the work who asked not to be named, citing policy. Turkey is also upgrading the part of the pipe that runs to its Mediterranean terminal at Ceyhan, he said Aug. 20 in an interview.

The added pumping strength “would double the flow of oil from 100,000 to 125,000 bpd in the first stage,” Yildiz said in an interview in Ankara. “It would be good if the daily supply capacity can reach 250,000 bbl and even exceed that.” Calls to the press office of the Kurdish administration’s Ministry of Natural Resources either didn’t connect or weren’t answered.

Turkey has been allowing the sale of Kurdish oil through Ceyhan since May, dismissing legal action by the Iraqi federal government, which calls the trade illegal. For the Kurds, whose armed forces have played a central role in countering an Islamist insurgency in northern Iraq over the past three months, the oil pipe offers an economic lifeline as they consider moves toward fuller independence from Baghdad.

Huge Reserves

Oil isn’t currently being pumped from northern Iraq due to some “work related to pipes,” Yildiz said, without elaborating. The industry official said the oil flow may resume within days after Turkey and the Kurdish regional government finish the pipeline upgrade.

So far 6.5 MMbbl of 7.8 MMbbl of Kurdish oil have been loaded from Ceyhan on a total of seven tankers, Yildiz said at a news conference on Aug. 18. The shipment came as the federal government in Baghdad, responsible under the Iraqi constitution for managing oil shipments and revenues, had tried to block Kurdistan from exporting oil on its own. Iraqi Kurds, ignoring Baghdad, separately export crude on trucks via Turkey as well.

The Kurdish government estimates untapped resources may total 45 Bbbl of oil, more than all remaining reserves in the U.S. Iraqi Kurdish President Massoud Barzani’s administration, which has promised a vote on independence from the rest of Iraq, says output may jump from 400,000 bpd in 2014 to 1 MMbpd next year, and twice that much by 2019.