KRG-Baghdad dispute export agreement

Iraq Oil Report
Friday, 8 May 2009


By BEN LANDO
Iraq Oil Report

The Kurdistan Regional Government (KRG) of Iraq announced Friday it will begin June 1 sending oil from the Tawke and Taq Taq fields to the northern Iraq export pipeline.
The Ministry of Oil in Baghdad has not confirmed the agreement. The ministry, which has sparred with the KRG over the rights to sign oil deals and set oil policy, would need to OK the field’s entry into the export pipeline. Spokesman Assem Jihad told Reuters no agreement has been reached.

These exports have been held up as the central and regional governments dispute the rights to sign oil deals and the mechanisms for revenue to be collected and redistributed, including to the producing companies.

The Tawke pipeline ended in Feshkhabor near the Turkish border as of June 2008, not yet connected. It has since been tied into the export line from Kirkuk. In the background is the metering station which the oil flows through before entering Turkey. (source: Ben Lando)
Baghdad says the KRG’s two-dozen oil deals and regional oil law undermine state authority of the oil sector. Oil Minister Hussain al-Shahristani has since called the deals illegal and blacklisted companies who signed with the KRG from buying Iraqi oil or signing deals. The KRG says it has the rights under the “new” Iraq’s federalist system.

Iraq exports about 1.8 million barrels per day (bpd), earning more than 91 percent of state income.

The Tawke field, operated by Norway’s DNO, on June 1 will produce “at an initial rate of around 60,000 barrels per day,” KRG Natural Resources Minister Ashti Hawrami said in a statement. “This follows the completion of all the metering instrumentation and the tie-in of the field pipeline with the Iraq-Turkey main export pipeline at the border town of Fishkhabur.”

Another 40,000 bpd is to be added in June from the Taq Taq field, operated by Turkey’s Genel Enerji and Canada’s Addax Petroleum. Until a pipeline is built linking the field to the export pipeline, the crude will be trucked from the field to be loaded into the export line.
“This will be a temporary measure and will continue until a field pipeline is laid between the Taq-Taq field and the Khurmala Station,” Hawrami said.

Hawrami’s statement also claims the quality of the Iraq oil exports will be improved by the added oil from the semi-autonomous three northern provinces that constitute the KRG. There were claims from Baghdad earlier this week the oil would be downgraded by the additional flow.
A ceremony is set for June 1, Hawrami said, and officials from the KRG and Baghdad governments are invited.

Currently, small amounts of oil are produced in the KRG, sold to the domestic market.

Hawrami told Iraq Oil Report last month the KRG could produce 250,000 bpd by the end of this year or early 2010, with plans to build pipelines with a capacity of 570,000 bpd.

http://www.iraqoilreport.com/the-biz/iraq-oil-exports-get-kurdish-boost/1420/