Workers lay an underground oil pipeline. (Photographer: Andrey Rudakov/Bloomberg)

Iraq Resumes Kirkuk Crude Oil Exports Via Kurdish-Run Pipeline

(Bloomberg) -- Iraq resumed pumping oil from a field in the disputed Kirkuk province, the first sign that output is recovering from last week’s fighting between government troops and Kurdish forces that hobbled pipeline exports from OPEC’s second-biggest producer.

Iraq’s central government, which rejected a Kurdish independence referendum last month, began exporting from the Avana field in Kirkuk through a pipeline operated by the Kurdistan Regional Government, according to an official at Iraq’s North Oil Co. and a port agent. Crude began flowing on Wednesday at a rate of about 90,000 barrels a day, they said.

State-run North Oil, which operates at Avana, was working as well to begin pumping at the nearby Bai Hassan field, which also halted production and exports, the official said, asking not to be identified because the matter isn’t public.

Increasing production from Iraq may put pressure on OPEC and other major producers seeking to rein in a global supply glut and firm up prices. The resumption in output at Avana also suggests the central government and the Kurdish authorities may have reached a deal to keep the oil flowing despite armed clashes sparked by the KRG’s Sept. 25 referendum for independence from Iraq that also included Kirkuk.

Oldest Fields

When sabotage and the conflict with Islamic State militants forced Iraq to stop exporting Kirkuk crude through its own pipeline, the central government began shipping to Ceyhan via a new, Kurdish-built link in the adjacent KRG region. Baghdad piggybacked its exports from Kirkuk with Kurdish shipments until last week’s hostilities. Kirkuk holds Iraq’s oldest producing fields.

The country pumps most of its 4.47 million barrels a day from southern oil fields and ships it from the Persian Gulf port of Basra. Crude exports from northern Iraq fell by more than half from their average of nearly 600,000 barrels a day as the Kurds withdrew from Kirkuk and federal forces occupied or surrounded oil fields there last week. Less than 200,000 barrels a day of Kurdish oil was reaching the Turkish port of Ceyhan by Thursday.

Iraq’s state oil marketing company hasn’t exported oil from Ceyhan since June, according to Bloomberg tanker tracking. The 90,000 barrels a day currently flowing from Kirkuk is earmarked for sale by SOMO, as the marketing company is known, according to the port agent.

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