Iraq Resumes Oil Exports From Kirkuk After Year-Long Halt

(Bloomberg) -- Iraq said it resumed oil exports from Kirkuk to Turkey, which had been halted for a year by a political dispute between the central government and the nation’s Kurds.

Between 50,0000 and 100,000 barrels a day are now being pumped through a pipeline from northern Iraq to the Turkish port of Ceyhan, Oil Ministry spokesman Asim Jihad said by phone. Flows stopped in October 2017 when Baghdad reclaimed control of Kirkuk fields from the Kurds, but not the pipeline needed to ship the crude to international markets.

Current flows amount to as much as half the oil capacity halted in Kirkuk -- about 200,000 barrels a day according to the International Energy Agency.

Iraq Resumes Oil Exports From Kirkuk After Year-Long Halt

The restoration of volumes comes at an inconvenient time for the Organization of Petroleum Exporting Countries. Oil prices have plunged, and Iraq’s partners in OPEC are discussing substantial output curbs to prevent a surplus forming in 2019. Iraq, the cartel’s second-biggest producer, may be less inclined to join the effort now that flows from the north have restarted.

The resumption will test the pipeline, and this first test may only last a few days, according to an oil official.

There were indications earlier this month that the restart might be imminent, when the Kurdistan Regional Government said it had expanded the capacity of the pipeline to handle 1 million barrels a day. Iraq’s newly appointed oil minister, Thamir Ghadhban, said in late October he was ready to begin negotiations with the Kurds.

Baghdad’s forces took control of the oil deposits around Kirkuk in October 2017 following a vote for independence by the Kurds, who had held the fields since 2014 to protect the area after Baghdad’s military fled amid an onslaught by Islamic State insurgents.

Although Baghdad regained possession of the fields, it was unable to export the crude as the pipeline connecting the deposits to international markets was held by the Kurds. The two sides remained in a dispute over sharing revenue and flows were halted, until now.

The Kurds have been able to keep exporting from other deposits, though, shipping about 400,000 barrels a day in the first half of this month, according to tanker-tracking data by Bloomberg.

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