x Abu Dhabi, UAETuesday 16 January 2018

Oil flow from Iraqi Kurdistan to resume

Iraqi Kurdistan tests older infrastructure ahead of restarting oil exports.

Iraqi Kurdistan is testing disused infrastructure ahead of restarting oil exports in the next few days.

"Exports from Kurdistan are due to start within a week," Abdul al Hassani, the vice chairman of the Iraqi parliament's oil and gas committee, told Bloomberg. "There is a commitment by both sides to resume oil exports from the province at an initial quantity of 100,000 barrels per day."

DNO International, a Norwegian company that pumps crude in the semi-autonomous region, said it was conducting "technical tests" in close co-ordination with the Kurdistan regional government and the Iraqi state-owned North Oil Company with the aim of raising output from the region's Tawke oilfield to 50,000 barrels per day (bpd) from the current 10,000 bpd. The crude is being sent through a pipeline that feeds Iraq's main northern oil export line to test the link's integrity.

The production tests started on Wednesday, DNO said. North Oil's pipeline currently carries oil to the Turkish border from the giant Kirkuk oilfield and other fields in northern Iraq lying outside the Kurdish zone. The oil eventually flows to an export terminal at Ceyhan on Turkey's Mediterranean coast.

Kurdish oil briefly contributed to the northern export volumes for a few months in 2009. But the Kurdish exports were suspended in October of that year because of a long-running dispute between the Kurds and Baghdad over oil contracts and payments to foreign producers.

Last month, Iraq's central government and the Kurdistan regional government signed an agreement to resume Kurdish oil exports and pay foreign producers, Asim Jihad, the Iraqi oil ministry spokesman, said on January 22.

Exports from two Kurdish fields - Tawke and Tak Tak - were to restart on Tuesday, according to Iraqi government officials, but the plan appears to be running a few days late.

DNO, the Turkish company Genel Enerji and China's Sinopec are so far the only foreign oil companies to develop production capacity in Kurdistan.

"We have agreed that they will resume exports of 100,000 bpd," said Hussain al Shahristani, the Iraqi deputy prime minister for energy. "We expect them to reach it."

As international crude prices continue to rise, Baghdad is seeking to boost Iraq's oil exports, which supply 95 per cent of the country's foreign revenue.

Crude exports increased to 2.15 million bpd last month from 1.95 bpd in December, Falah Alamri, the head of Iraq's State Oil Marketing Organisation, said on Thursday. Most of the crude was shipped from Iraq's southern oil hub of Basra.