Turkey Quietly Signs Strategic Oil Deal With Iraqi Kurds

Article Summary
Turkey has quietly signed a strategic oil deal with the Iraqi Kurdistan Region, in a move that is bound to raise tensions between Erbil and Baghdad.

As the conflict between the Iraqi central government and the Northern Iraq Kurdistan Regional Government [KRG] continues over the sharing of oil, Turkey is reported to have quietly signed an oil partnership deal with the KRG. The deal is seen as proof of that Turkey is elevating its cooperation with the Iraqi Kurdistan region to level of international partnership, despite the objections of the Baghdad government.

According to information released by KRG officials yesterday [June 19], shares have been given in Shoman, Hindren, Arbat, Pulkana, Jebel Kand and Halakan blocs to a company that has thus far only been identified as "the Turkish institution." Sources close to the deal say that the company, which has been licensed for oil exploration, is 100% owned by the Turkish state. The Turkish Ministry of Energy Resources refused to comment, and the state owned Turkish Petroleum Corp. [TPAO] said they are not the ones who signed the deal.

According to a Reuters report, Turkey will have 80% shares in the Shuman and Hindren fields — close to the Iranian border — and in Arbat in the southeast.

The Turkish company will have 40% shares of the Pullman, Jebal Kand and Halakan fields. Energy experts noted that negotiations between Turkey and the KRG have been going on for a year. The new agreement is bound to increase tensions between the Iraqi central government — which claims exclusive rights to sign energy deals — and Turkey and Northern Iraq.

Just hours after the signing of the oil deal, the KRG's energy minister, Ashti Hawrami, announced that the new pipeline that will transport the region's crude oil to Turkey will be operational by the end of September. Hawrami said the initial capacity of the pipeline will be 300,000 barrels per day, which can later be boosted to one million barrels. With current prices, the oil that the new pipeline will transport in the first year will be worth $11.5 billion and that will reach to $38 billion when the pipeline works at full capacity. The KRG is not using the existing Kirkuk-Yumurtalik pipeline because it is owned by the central government.

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Found in: turkey, oil contracts, oil, kurdistan
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