Adds plan to truck crude to Syria and Jordan in paragraphs 5 and 12
Iraq is seeking alternative export routes for its crude to the north, to ports in Turkey, Jordan and Syria, the country's oil minister has said.
With its 3.4mn b/d of southern Basrah exports shut in by the de facto closure of the strait of Hormuz, and with the country relying heavily on oil revenues to fund government spending, Baghdad is aware that a prolonged shutdown of exports could place severe strain on state finances and economic and political stability.
Baghdad has cut crude production to 1.5mn-1.6mn b/d to prioritise domestic refining and electricity generation, Abdulghani said. Argus estimates production at around 1.2mn b/d.
Iraq was expected to produce 4.273mn b/d under its Opec+ quota in March, meaning it has shut in around 3mn b/d.
One export option is to begin pumping crude from northern Kirkuk fields to Turkey's Ceyhan port through a long-closed pipeline that will allow it to do so independently of the Kurdistan Regional Government (KRG), oil minister Hayyan Abdulghani said today. Other options are to truck crude to Syria's Banias port and Aqaba in Jordan, he said.
The pipeline to Ceyhan, which has been closed by damage since 2014, could initially carry 200,000-250,000 b/d, Abdulghani said. He said final inspections on the rehabilitated pipeline segment are expected to be completed within about a week.
The attempt to restart northern exports comes as a dispute between Baghdad and the Kurdistan Regional Government (KRG) intensifies over the use of the pipeline that crosses the Kurdistan region to Turkey. The pipeline, also to Ceyhan, is currently shut, and has been only intermittently operating, at far below its 900,000 b/d capacity, since the war began.
Iraq's oil ministry said on 15 March it had repeatedly asked Erbil to allow the resumption of exports from federal fields at up to 300,000 b/d. The KRG has also previously exported around 200,000 b/d.
The ministry said the KRG refused to restart exports and attached conditions unrelated to the oil flows. The KRG's ministry of natural resources (MNR) rejected this, saying Baghdad was attempting to shift blame. The MNR said production in Kurdistan had already been halted following repeated missile and drone attacks on energy infrastructure carried out by militia groups.
The KRG also accused Baghdad of imposing what it described as a "suffocating economic blockade" on the region through restrictions on dollar access and trade flows. KRG leader Masoud Barzani called on both governments to meet and resolve their differences, warning Iraq faces multiple crises as the regional war continues.
"Opportunists seeking to deepen divisions must be stopped," Barzani said on 16 March.
Earlier proposals from Erbil suggested a broader political settlement linking customs systems, dollar access for local traders and the resumption of oil exports through the Ceyhan pipeline.
Iraq has also issued several tenders for the supply of crude from Syria's Banias and Jordan's Aqaba ports, Abdulghani said.
The tender awards are expected within the next two days and the crude will be moved to the two ports by truck. Some market sources said the supplies could head to Mediterranean refiners, given the ports' proximity, but doubted they will be able to offset the region's looming shortfall of Iraqi crude through the strait of Hormuz.
