The closure of Iraq’s oil export pipeline to Turkey’s Mediterranean coast in late March has already cost producers and government coffers nearly $4 billion, according to an industry group.
(Bloomberg) — The closure of Iraq’s oil export pipeline to Turkey’s Mediterranean coast in late March has already cost producers and government coffers nearly $4 billion, according to an industry group.
Losses are expected to continue despite initial talks between the Iraqi and Turkish governments to resolve the issue, the Association of the Petroleum Industry of Kurdistan said. The group represents international producers including DNO ASA, Genel Energy Plc, Gulf Keystone Petroleum Ltd., HKN Energy Ltd. and ShaMaran Petroleum Corp.
Producers in the northern Kurdish region of Iraq have been forced to cut output since Turkey halted flows on the pipeline. An arbitration court ordered it to pay about $1.5 billion in damages to Iraq for previously transporting oil without Baghdad’s approval, and Turkey now wants a negotiated settlement of the dispute before reopening the pipeline.
The companies said they won’t resume production and exports unless they have a clear contractual arrangement with Iraq’s federal government for future payments. They had been working in the semi-autonomous Kurdish region under contracts that gave them a share of production and profits from the fields. Iraq’s federal government disputed those deals, saying it’s the only entity that can legally sell any oil pumped in the country.
The group said it “will not produce oil for pipeline exports until it is clear how international oil companies will be paid for their contractual entitlement to past and future exported oil.”
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