Turkish energy minister denies selling Kurdish oil without Baghdad’s consent

ANKARA/ARBIL 18-2-2014 – Hurriyet –  Energy Minister Taner Yıldız has refuted media reports that Turkey has already undertaken a $90-million Iraqi Kurdish oil sale without waiting for Baghdad’s permission, repeating that the central Iraqi government’s approval is crucial to proceed further in an oil deal with Arbil. “Sometimes I learn from the press that a $90-million sale has been carried out, but this is not at issue right now,” Yılıdız said on Feb. 17, speaking to reporters while meeting with Oil Platform Association board members.

“If there will be a sale, it will be within the knowledge of Baghdad and its revenues will be conveyed to them. We always say this is not Turkey’s oil, it is Iraq’s,” he stressed. Daily Milliyet had reported Kurdish sources as saying that the first tranche of oil had been sold through the Trans Petroleum company in Singapore. The report published on Feb. 15 claimed that the $90 million collected from the first sale was put in Turkish state-owned lender Halkbank. Sources further said the issue was brought up during Iraqi Kurdish Prime Minister Nechirvan Barzani’s meeting with Turkish Prime Minister Recep Tayyip Erdoğan on Feb. 14, as he requested that Arbil’s part be paid.

“We wish for Arbil and Baghdad, two brothers, to agree between themselves and for the revenues to be yielded here to be transferred to their accounts after being blocked in Turkish banks,” Yıldız added. Central and regional governments of Iraq have been in a long-standing dispute over the latter’s desire to export its own oil to world markets via Turkey.

The row escalated when Arbil stated to pump Kurdish oil through a new pipeline to Turkey.

Baghdad has threatened to sue Ankara and slash the autonomous region’s share of the national budget if exports go ahead through the pipeline without its consent. The pipeline was completed late last year, and oil has since been pumped through it into storage tanks at Turkey’s Ceyhan, but exports from the Mediterranean port are on hold to give diplomacy a chance. Negotiations have carried on for months with little progress. Yesterday, Barzani and Iraqi Kurdish Minister of Natural Resources Ashti Hawrami headed for Baghdad to intensify efforts to settle a long-running dispute, Reuters reported. However, one industry source said he foresaw a breakthrough “in a week or two,” adding, “If it takes any longer than that, there is a problem.”

Crude from Kurdistan used to reach world markets through Baghdad’s infrastructure, but exports via that channel dried up due to a row over payments for oil companies operating in the northern enclave.

Since then, the Kurds have been exporting smaller quantities by truck across the border whilst building the pipeline to Turkey and negotiating a multi-billion dollar energy deal with Ankara. The landmark deal laid the ground for development of the infrastructure for Kurdistan to export some 2 million barrels per day (bpd) of oil to world markets and at least 10 billion cubic meters per year of gas to Turkey. The sources said there were some technical issues with the pipeline, including air pockets, which have been resolved and that oil was flowing more or less continuously, albeit in small quantities. The Kurdish pipeline ties into an existing network controlled by Baghdad that links the northern Kirkuk oilfields to Ceyhan. Both are using the same pumping station, which has caused some problems.

The Kurds plan to install their own pumping station, but it has yet to be commissioned and will take several months to be put in place, the sources said.