Ceyhan crude exports set to resume after Iraq/KRG reach agreement

Quantum Commodity Intelligence – Oil exports from Northern Iraq to the Turkish port of Ceyhan are set are to resume after Bagdad reached an agreement with the semi-autonomous Kurdistan Regional Government (KRG), according to officials.

Around 450,000 bpd of Kirkuk crude was being piped via Turkey prior to the shutdown over a week ago after Baghdad won a landmark international court decision, ruling Turkey had violated a bilateral treaty by facilitating independent pipeline flows from Kurdistan.

The pipeline is expected to start initial operations Tuesday, transporting crude currently held in storage tanks, but it is unclear how long it will take to resume crude output after several fields were closed when storage reached tank tops.

Officials from the two sides had been locked in negotiations for the past week, while details of the revenue share on the new agreement have not yet been made fully public    

But Iraq Oil Report said the two sides have agreed to a compromise arrangement, whereby the KRG will control its oil revenue, but the federal government's marketing company, SOMO, will sell the oil produced by the KRG.

"This agreement consisted of five points, and there will be some technical and follow-up meetings until oil exports resume," a senior Iraqi official told IOR.

Around 375,000 bpd of crude underpins KRG's bid for autonomy while Baghdad exports just 75,000 bpd via Ceyhan, a small fraction of overall exports which are well in excess of 3 million bpd - the majority of it via the Middle East Gulf.