x Abu Dhabi, UAETuesday 25 July 2017

Kurds open oil pipelines for testing

Iraq has started exporting oil from its semi-autonomous Kurdistan region, after years of deadlock over disputed Kurdish oil contracts.

Iraq has started exporting oil from its semi-autonomous Kurdistan region, after years of deadlock over disputed Kurdish oil contracts. But it is still unclear how DNO International, the Norwegian firm pumping the oil, will be paid. Asim Jihad, the Iraqi oil ministry spokesman, said Iraq had started shipping crude from Kurdistan's Tawke field to a Turkish port on the Mediterranean. "We finished linking the pipelines from the Tawke oilfield to the strategic Kirkuk-Ceyhan pipeline and have installed the meters," Mr Jihad said, according to Reuters. "We started pumping 10,000 barrels per day (bpd) to boost exports to Ceyhan." A spokesman for DNO International, which holds a concession for the oilfield from the Kurdistan regional government (KRG), said some oil would be shipped during tests of the pipeline, but the company expected to start formally exporting on Monday. He said it would increase shipments to 50,000 bpd "as soon as possible". DNO had agreed to a 60-40 revenue split with the KRG during the "test production" phase of the Tawke field's development but that formula would change, the spokesman said without elaborating. The company signed a production-sharing agreement with the Kurds in 2004. Kurdistan's oil law, which the regional government enacted unilaterally in 2007, calls for the Kurds to keep 17 per cent of revenues from oil and gas production in their territory, and for the rest to pass to Iraq's central government. That is in line with the provisions of Iraq's draft federal oil law, which has been stalled in parliament for the past two years. But Baghdad's rejection of contracts between the KRG and foreign oil companies has created ambiguity about whether the two governments' revenue split for exports would be calculated before or after concession holders are paid their cut. "The Iraqi oil ministry is committed to exporting the crude from Kurdistan," Mr Jihad said. "All revenues will go to government coffers." tcarlisle@thenational.a