The Iraq-Turkey pipeline (ITP) is almost ready following months of earthquake-damage inspection and assessment, according to Turkey's energy minister Alparslan Bayraktar, but he again held Ankara's line that a restart of crude flows is more to do with internal Iraqi politics.
"It is more or less ready," Bayraktar said. "[The restart] isn't related to Turkey. It's related to Erbil and Baghdad, and they need to get together and decide how they're going to proceed."
This has been Ankara's line ever since it halted Iraqi crude exports from Ceyhan on 25 March, after an arbitration ruling said Turkey had allowed crude from Iraq's semi-autonomous Kurdistan region to be exported without Baghdad's consent. Talks about how and when to restart pipeline flows have been underway between Turkey and Iraq since late June. The Kurdistan Regional Government (KRG) has mostly been a bystander in the dispute.
Turkish foreign minister Hakan Fidan, who is leading diplomatic talks with Iraq on the arbitration case and the restart of northern Iraq crude exports, told Argus on the sidelines of the G20 summit in Delhi that he expects crude flows "to start soon". But neither minister pinpointed a date or offered a timeline as to when the near 470,000 b/d of crude that is shut in by the dispute will be back on the market. This encompasses around 400,000 b/d sold by the KRG and around 70,000 b/d of federal Iraqi crude.
Bayraktar said checks on the pipeline were necessary after a massive earthquake in February and then an oil spill in March near Ceyhan.
"This oil spill was a warning sign for us," he said. "We decided to check the entire pipeline, 650km long." He said an independent survey is being prepared that Turkey may need to defend itself against any legal action from Baghdad.
Turkey is also seeking legal action against Iraq, and has filed at the Paris-based International Chamber of Commerce (ICC) a motion to set aside the arbitration ruling, according to Bayraktar. The ICC had ordered Ankara to pay Baghdad $1.9bn for breaching its contract with Iraq by directly trading oil with the KRG between 2014 and 2018, and awarded Turkey around $500mn for counterclaims, mainly predicated on low pipeline capacity and unpaid transportation fees dating back to the 1990s. All awards remain subject to pending interest rates.
"As of today, Iraq continues with the first arbitration," Bayraktar said. "They opened the case in [Washington] for enforcement and we also needed to go and open an enforcement case. Also, we opened a file in the Paris court for a set-aside case," he said. It is unclear if Turkey is seeking to cancel the ICC ruling to start over again, or wants a partial overturn.
Iraq in April petitioned the US District Court of the District of Columbia requesting enforcement of the ICC's ruling. Turkey last week argued at the court against that, offering its own calculations that indicate Iraq gets $2.6bn in damages and interests, while it gets $3.5bn. This makes Ankara the beneficiary of a more than $950mn net award of the ICC ruling.
"This is our expectation according to our independent experts," Bayraktar confirmed.
