Turkey to reopen oil pipeline with Iraq

The pipeline has been closed for six months after it was ruled that Turkey was transporting oil without Iraq’s approval.

Alfie Shaw October 03 2023

Turkey will reopen an oil pipeline to Iraq this week after it was suspended for around six months.

Alparslan Bayraktar, Turkey’s Energy Minister, said on Monday at the ADIPEC conference in Abu Dhabi: “Within this week, we will start operating the Iraq–Turkey pipeline after resuming operations. It will be able to supply half a million barrels, almost, to global oil markets.”

In March 2023, Turkey stopped flows through the twin pipeline after the International Chamber of Commerce International Court of Arbitration ordered Ankara to pay around $1.5bn (Tl41.16bn) in damages to Iraq for transporting oil without Baghdad’s approval. Turkey wants the fine to be reduced.

The arbitration case has been running in the Paris-based court for almost nine years with Iraq claiming that Turkey had violated the 1973 pipeline transit agreement by allowing crude from the Kurdish region to be exported without Baghdad’s permission.

Since the ruling, Ankara has started maintenance work on the pipeline, which contributes around 0.5% of global crude supply, as it says the pipeline was damaged by earthquakes in February.

The line provides an important source of revenue for the Kurdistan region and since its closure the Kurdistan Regional Government has been forced to rely on loans to pay public salaries.

Before the closure, the twin pipeline had a capacity of 1.6 million barrels per day (bpd) but averaged around 450,000bpd just before it shut.

It is estimated that Turkey has lost more than $1bn worth of revenue since the closure. Turkish authorities believe Iraq is losing far more, however, and Baghdad and Erbil will therefore have a strong motivation to find a solution.

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