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Oil pipeline shutdown has cost Iraq $20bn

25 September 2024

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Members of the Association of the Petroleum Industry of Kurdistan (Apikur) have said that the shutdown of the Iraq-Turkiye oil export pipeline (ITP) has cost Iraq $20bn, and are calling for the immediate resumption of exports through the pipeline.

Oil exports through the pipeline stopped after a Paris-based arbitration court ruled in favour of Baghdad against Ankara, saying the latter had breached a 1973 agreement by allowing Erbil to begin independent oil exports in 2014.

In a statement, the organisation said: “As world leaders gather in New York for the United Nations General Assembly, Apikur member companies call for the government of Iraq to engage with the Kurdistan Regional Government (KRG) and international oil companies (IOCs) to resolve outstanding issues and immediately restore exports through the ITP.”

Prior to the halt of exports through the ITP in March 2023, approximately 450,000 barrels a day of oil were sent from Iraq via Turkiye to international markets.

Apikur said that it was “encouraged” by recent comments by Iraqi Prime Minister Mohammed Shia Al-Sudani, when he said that the pipeline could be opened by the end of the year.

The organisation said: “Apikur member companies are prepared to resume exports, contingent upon reaching agreements that provide for payment surety for past and future exports, direct payment and preservation of commercial and economic terms.

“Should such agreements require modifications to existing contracts, Apikur member companies are willing to consider this if agreed between the government of Iraq, the KRG and individual IOCs.

“Apikur member companies agree with public statements made by the KRG that direct sales agreements between IOCs and Iraq’s SOMO offer the best option for resolving the current situation – those agreements should provide the IOCs with surety for payment through upfront payment, escrow arrangements or payments in-kind at Ceyhan Port.”

SOMO is the State Organisation for Marketing of Oil, an Iraqi national entity. 

Apikur said that Iraq and all stakeholders will gain approximately $1bn a month in revenue from oil sales and that a total of $20bn has been lost to all parties since the halt of ITP oil exports in March 2023.

Myles Caggins, a spokesperson for Apikur, said: “Apikur member companies call for formal tripartite meetings with government of Iraq and KRG officials to immediately restore exports through the Iraq-Turkiye Pipeline.”

He added: “With $20bn lost to all parties, including the people of Iraq, Apikur member companies seek mutually beneficial solutions and prompt follow-through action from the government of Iraq officials who have publicly stated that re-opening the Iraq-Turkiye Pipeline is a priority.”

The international companies that are members of Apikur are Norway’s DNO, UK-headquartered Genel Energy, London-listed Gulf Keystone Petroleum, Dallas-headquartered HKN Energy and Canada’s ShaMaran Petroleum.

Many IOCs have reported significantly lower revenues due to the pipeline closure and have had to make cuts to their workforces in the region.

https://image.digitalinsightresearch.in/uploads/NewsArticle/12591778/main0902.jpg
Wil Crisp

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