Iraqi Kurdistan begins oil exports of 100,000 b/d

Iraq's semiautonomous region of Kurdistan began exporting crude for the first time, sending 100,000 b/d from the Taq Taq and Tawke oil fields via the Iraq-Turkey pipeline to the Turkish port of Ceyhan.

Jun 1st, 2009

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, June 1 -- Iraq's semiautonomous region of Kurdistan began exporting crude for the first time, sending 100,000 b/d from the Taq Taq and Tawke oil fields via the Iraq-Turkey pipeline to the Turkish port of Ceyhan.

The export program will serve the interests of all Iraqis, especially the Kurds, said Kurdish President Massud Barzani, who was joined by Iraqi President Jalal Talabani at a launch ceremony.

Initial exports include 40,000 b/d from Taq Taq and 60,000 b/d from Tawke, with the combined output expected to reach 250,000 b/d in the coming year.

The Tawke exports are piped to a link with the main Iraq-Turkey export pipeline at the border town of Fishkhabur. The Taq Taq crude is trucked from Arbil to the Khurmala station where it enters the Iraq-Turkey pipeline.

At the launch ceremony, Talabani underlined the importance of the region's enterprise, noting in particular the legitimacy and effectiveness of the contracts signed by the Kurdish Regional Government with international oil companies.

"These contracts are legal, constitutional, and legitimate, and they are in the interests of Iraqi people," said Talabani, himself a Kurd.

No non-Kurdish members of the Iraqi government attended the ceremonies, underlining Baghdad's continued displeasure with the agreements.

The Iraqi Oil Ministry considers agreements between IOC's and the KRG illegal, even threatening to exclude and blacklist companies that sign agreements with the Kurds without consulting with the central government.

The Kurds, who say their agreements are in accord with the country's 2005 constitution, have no plans to discontinue them.

That was underlined at the opening ceremonies, where regional natural resources minister Ashti Hawrami said Kurdistan would continue to seek its own partners without the approval of the central government.

"Iraq has had a revenue shortfall of $10 billion due to the incompetence of Iraq's ministry of oil," Hawrami said, suggesting that despite Baghdad's objections the KRG was adding to the country's desperately need revenues through the contracts it signed.

"We signed 30 contracts, and Baghdad said at the beginning that we would not be able to sign any because no foreign company would develop our oil," said Hawrami, who added that the oil ministry "put up obstacles" to developing the country's crude.

According to reports, Iraq is in dire need of revenues to rebuild its economy, especially after international oil prices fell from a peak of $147/bbl in July 2008 to barely $32/bbl in December.

As a result of the new Kurdish export stream, Baghdad is set to receive 71% of the revenues from the Taq Taq agreement, the KRG will receive 17%, and partners Genel Enerji and Addax will share the remaining 12%. A DNO ASA official said terms of the Tawke agreement are similar to those of Taq Taq.

Kurdish oil will be marketed by Iraq's State Oil Marketing Organization, and the revenues initially will be deposited in the federal account.

Contact Eric Watkins at hippalus@yahoo.com.

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