Iraqi Kurdish oil exports via Turkey may quadruple to half a million barrels a day in months, according to an official with knowledge of the situation, citing improvements in pumping capacity.
The installation of a new booster station at Fishkabur in the semi-autonomous Kurdish region on the main pipeline from Iraq to the Turkish Mediterranean terminal of Ceyhan more than doubled flows to 300,000 barrels as of yesterday, the official said, asking not to be named citing policy. Turkey also modified the link inside its borders, further boosting capacity, he said.
Iraqi Kurds are considering a fourth booster that could increase capacity to 500,000 barrels a day within as little as three months, the official said. The Kurdistan Regional Government, or KRG, didn’t answer phone calls to its press office outside office hours today.
The plans come after explorers including Chevron Corp. (CVX) and Afren Plc (AFR) evacuated staff and halted drilling in the region as Islamist militants advanced into northern Iraq. DNO ASA, the Norwegian company that operates the Tawke field, said yesterday it may need to push back growth targets for Kurdistan production after service companies evacuated workers.
The explorer, which exported 35 percent of its output in the second quarter by pipeline to Turkey, said it may fail to reach a goal of boosting capacity at Tawke to 200,000 barrels a day by year-end after reaching a peak of 130,000 barrels a day. At the same time, DNO said it and other producers had for the first time been cleared by the KRG to export oil on their own.
Economic Lifeline
For the Kurds, whose armed forces have played a central role in countering the insurgency in Iraq over the past three months, oil is an economic lifeline as they consider moves toward greater independence.
“The increased capacity is needed to allow delivery to Ceyhan of growing volumes from the Taq Taq and Tawke fields,” Bloomberg oil strategist Julian Lee said today. The “300,000 barrels per day through the Kurdish pipeline would boost Iraq’s exports by 12.5 percent and could make an important contribution to revenue, if accepted by Baghdad.”
Turkey has ignored objections by the central government in Baghdad, which says the oil exports are illegal and must be stopped. Seven tankers have so far loaded 6.5 million barrels of Kurdish oil transported to the Ceyhan terminal, Turkey’s Energy Minister Taner Yildiz said on Aug. 18.
Baghdad has tried to block the KRG from exporting oil on its own, citing a constitutional clause making the central government responsible for oil shipments and revenues. Iraqi Kurds have also separately been exporting crude on trucks via Turkey.
“The Kurds are becoming more confident of their ability to export crude independently of Baghdad,” said Lee, who writes for First Word and whose views are his own. “At least four of the seven tankers that loaded Kurdish crude from Ceyhan have successfully discharged their cargoes, suggesting that willing buyers are starting to emerge.”