Iraq's Kurdish oil exports restart is not imminent

A resumption of Iraq’s Kurdish oil exports is not expected in the near term, sources familiar with the matter said on Friday, despite an announcement by Iraq’s federal government a day earlier stating that shipments would resume immediately.

Since February, Baghdad and the Kurdistan Regional Government (KRG) have been locked in negotiations to resolve a standoff that halted crude flows from northern Iraq to Türkiye’s Ceyhan port. Prior to the shutdown of the pipeline in March 2023, the KRG had been exporting approximately 435,000 barrels per day (bpd).

On Thursday, the federal government declared that oil exports from the Kurdish region would recommence without delay via the pipeline, even as drone attacks had crippled about half of the region's oil production. However, industry sources cast doubt on the feasibility of a swift restart.

A representative from APIKUR, a group of international oil companies operating in the Kurdish region, said that a resumption is contingent on receiving formal, written agreements. A source at KAR Group, the operator of the pipeline, confirmed that no preparations for resuming flows had yet been made.

A KRG government official added that Baghdad and the oil companies have not reached consensus on the technical and financial mechanisms required to restart exports. Additionally, a source at the Ceyhan terminal in Türkiye said there were no signs of imminent activity at the port.

While KRG Prime Minister Masrour Barzani said on Thursday that his government had approved a joint understanding with Baghdad, he noted that financial terms were still under discussion. Previous deals have similarly failed to yield concrete progress on resuming oil exports.

Oil companies operating in the region have insisted that their production-sharing agreements must remain intact and that nearly $1 billion in outstanding debts be addressed as part of any settlement.

On Friday, Genel Energy and Gulf Keystone Petroleum declined to comment on the status of exports. DNO, Hunt Oil, and HKN Energy did not immediately respond to media inquiries.

Drone attacks compound export delays

Adding to the uncertainty, a series of drone strikes has hit oilfields in Iraqi Kurdistan over the past week. Regional officials have blamed Iran-aligned militias for the attacks, although no group has claimed responsibility.

These are the first direct strikes on Kurdish oil facilities and come as Houthi militants in Yemen resumed attacks on Red Sea shipping for the first time in seven months.

On Thursday, a drone targeted an oilfield operated by Norway’s DNO in Tawke, according to the region’s counter-terrorism agency. It was the second such strike on DNO infrastructure this week. The company operates the Tawke and Peshkabour fields near the Turkish border in the Zakho area.

No injuries were reported, but production losses have been estimated at 140,000 to 150,000 bpd, according to two energy officials. The disruption further complicates efforts to resume full-scale exports from the region.

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