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Kurdish oil production halted over export dispute

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Genel Energy, which has a working interest in the Tawke oil field, said it had begun shutting down production following an international court decision that tacitly restricted crude oil exports through the Turkish network.File photo by Kamal Akrayi/EPA-EFE
Oil remains a central component of political developments in Iraq as the Kurdish regional government is reviewing its crude export options following an international court ruling in Baghdad’s favor.File photo courtesy of Wes Eplen/Navy/UPI
The shutdown at Kurdish oil fields has partly supported a recent rally in crude prices, which are recovering ground lost on concerns over a global banking crisis. File photo of John Angelillo/UPI

March 29 (United Press International) — Major energy companies with operations in northern Iraq said on Wednesday they had shut production because of an international court decision that tacitly restricted crude oil exports through Turkish networks.

Norwegian energy company DNO says it has started shutting down oilfield Among the Kurds in northern Iraq.

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Earlier this week, the semi-autonomous Kurdistan regional government directed the DNO to stop sending oil to the pipeline to the Turkish port of Ceyhan.

The company explained that the order follows “an arbitration ruling in Iraq’s favor against Turkey and its state-owned pipeline operator BOTAS for transporting Kurdish oil without Baghdad’s prior approval”.

The pipeline to Ceyhan transports about 500,000 barrels of oil per day, most of it Kurdish. Any oil that is still flowing will go to storage tanks, which have limited capacity, the DNO said.

“It is unfortunate that it has come to this point given the likely impact of ongoing supply disruptions on oil prices and the fragile period in global financial markets,” said DNO executive chairman Bijan Mossavar-Rahmani.

Together with DNO, Genel Energy has an interest in the Tawke and Peshkabir fields. Production at Peshakbir stopped on Tuesday evening local time and it was planning to postpone any scheduled maintenance, the company added.

“The Tawke production shutdown has already begun, but will take another day or so given the much larger number of wells spread out over about 10 kilometers (6 miles),” General statement.

The two fields are producing an average of about 107,000 barrels per day, a drop in the bucket compared to Iraq’s full potential, though the shutdowns have partly boosted crude prices.

The central government in Baghdad and the KRG have been at loggerheads for years. Iraq’s central government filed a lawsuit with the International Chamber of Commerce in 2014, saying Turkey had violated a 1973 bilateral agreement by allowing KRG to send oil through the pipeline without Baghdad’s consent.

The Kurdish government said last week that the decision would not affect relations between the two governments. Representatives of all three governments will discuss the issue at a meeting in Baghdad.

Iraq is the second largest oil producer among members of the Organization of the Petroleum Exporting Countries, with an average output of about 4 million barrels per day.

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