Eyes on Iraqi oil

Mithat Yurdakul / ANKARA - After a two-year hiatus, oil shipments to Turkey via the Kirkuk-Yumurtalik Pipeline are expected to resume. Murat Kalay, Secretary General of the Petroleum and Natural Gas Platform Association (PETFORM), said, “The resumption of oil flow is valuable in terms of balancing our domestic market.” Kalay, who also stated that there was a critical clause in the pipeline contract, said, “By using that clause, we are bringing the 75 thousand barrels per day of Gabar to Ceyhan through that passive pipeline. Compared to the capacity of that pipeline, Gabar’s 75 thousand barrels per day is just a drop in the ocean.”

Following the decision of the International Arbitration regarding oil exports between Turkey and Iraq , the flow of oil from Iraq to Ceyhan was stopped in 2023. Following the interruption that caused more than $20 billion in economic damage to Iraq, it was stated that the Baghdad administration and the Kurdish Regional Government (IKBY) continued negotiations for oil production, while Turkey began waiting for news from Iraq regarding oil shipments. The Iraq-Turkey Crude Oil Pipeline consists of two lines, the first of which was put into operation in 1976 and the second in 1985, with a length of 986 km.

The two administrations agreed

PETFORM Secretary General Kalay, in his statement to Milliyet, said, “This has been a gangrenous process for the last 2 years. But the final point has been reached. The central government and the regional government have agreed on a certain methodology. Because every minute that oil does not flow, it becomes both the lifeblood of Iraq and the most basic economic input of the regional government. Recently, international information is being pumped out by Iraq that this problem will be solved and the flow will start. When there is a flow in the pipeline, it will come to Ceyhan, only then can we say that the process has started.”

Kalay, who explained that there was a disagreement between Baghdad and the Kurdish administration on financial issues, said, “They agreed on a certain figure. Now, the flow needs to start there in a joint manner. An agreement was signed with BP, especially for the development of the fields on the Kurdish side. It will be a large-scale investment, to increase production there. All of these are signs that this problem has been solved.”

1.5 -2 million barrels per day

Kalay explained the importance of the Kirkuk line for Türkiye as follows:

“The capacity of our pipeline with Iraq is close to 1.5 million barrels per day, even more. Compared to the capacity of that pipeline, Gabar’s 75 thousand barrels per day are just a drop in the ocean. The process continued with an average of 500 thousand barrels until the pipeline was cut. It is very unlikely that Gabar oil will remain idle or will not be able to flow through that line. The Kırıkkale refinery was completely fed by oil coming from Iraq. All refining systems and connections and pipelines in Turkey were established primarily through the pipeline coming from Kirkuk. This put a great burden on the refinery and TÜPRAŞ operationally. They made serious operational changes. It has definitely affected the costs. Now, the resumption of flow from there is valuable in terms of our domestic market settling into balance.”

Kalay emphasized that Turkey did not experience an oil shortage due to the cutting of the line, and said that with the Kirkuk line out of service, its oil needs were met from countries such as Russia, Saudi Arabia and Egypt.

'Critical' clause in the contract benefits Gabar

Kalay, who stated that Turkey receives its own pipeline revenue via the Kirkuk line, said, “But rather than this revenue, it is more important for us to reach a reliable, sustainable supply source.” Kalay, who stated that there is a critical clause in the pipeline contract, said, “There is a clause that says, ‘If a new oil discovery is made in the Southeastern Anatolia region, it has the right to take that oil to Ceyhan using this pipeline.’ Using that clause, we are taking the petroleum in Gabar to Ceyhan through that passive pipeline.”