Turkey is holding presidential elections on Sunday, a move some observers say could delay the resumption of flows. Turkey's energy ministry did not respond to a request for comment on the possible resumption of flows. Iraq is ready to pump up to 485,000 barrels per day (bpd), including 400,000 from the semi-autonomous Kurdistan Region and 75,000 to 85,000 from Iraq's Kirkuk oilfields, Oil Minister Hayan Abdel-Ghani told Reuters during an interview on Friday.
On March 25, Turkey halted 450,000 bpd of northern exports through the Iraq-Turkey pipeline after an International Chamber of Commerce (ICC) arbitration ruling.
The ICC ordered Ankara to pay Baghdad damages of $1.5 billion for unauthorised exports by the Kurdistan Regional Government (KRG) between 2014 and 2018. Abdel-Ghani said the payment of damages was not up for discussion with Turkey, but sources previously told Reuters that Turkey has sought negotiations relating to the damages and wants a permanent resolution to other open arbitration issues before resuming flows. Abdel-Ghani said that the stoppage of oil flows in March coincided with a request that Turkey check the pipeline and storage tanks for any damages resulting from the Feb. 6 earthquake. He said Iraq was waiting to hear from Turkey on whether checks and maintenance had been completed.
Iraq's request to resume flows on Saturday, made to Turkish state energy company BOTAS, came after traders buying crude from the Kurdistan region signed new contracts with Iraq's state-owned crude marketer SOMO.
The KRG has agreed for SOMO to market its crude oil and for prices to be set by the same formula SOMO uses, Abdel-Ghani said. Its export revenue will be deposited in an existing KRG bank account with Citi in the United Arab Emirates, three sources familiar with the matter previously said, and Baghdad will have auditing access.
SOMO also had to iron out contracts with buyers of KRG
crude. The newly signed contracts are for a period of up to
three months but do not address the vast amount of debt that the
KRG owes trading firms, one of the three sources said.
Basim Mohammed, Iraqi deputy oil minister for upstream
affairs, told Reuters the issue of KRG debts "will be discussed
with the region (KRG) through the ministries of oil and
finance."
"The Iraqi government is serious about reaching an
agreement that is satisfactory for both parties," he said.
Producers in the region have called for the KRG to
prioritise debt repayment, making transparency and regularity of
payments conditions for new investments and maximum export flows
once the pipeline reopens, an industry source previously said.
Abdel-Ghani said Iraq was working to address issues faced by
international oil companies leading to delays in production and
extra costs, such as long wait times for the issuance of staff
entry permits and the release of materials from customs.
(Reporting by Aref Mohammed in Basra; writing by Timour Azhari
and Ahmed Rasheed; Editing by Alexander Smith, Elaine
Hardcastle)
