Iraq, Iran In Negotiations To Ship Oil From Kirkuk Fields

The energy ministries of Iraq and Iran are negotiating the shipment of crude oil from the fields around Kirkuk to the Kermanshah refinery in Iran, the head of SOMO, Alaa al-Mussawi said.

Initially, al-Mussawi said, Iraq will ship 15,000 bpd of crude by trucks to the Iranian refinery, eventually increasing this amount in view of the refinery’s 25,000-bpd capacity.

Until recently, oil from the fields around Kirkuk was shipped to the Turkish port of Ceyhan via a pipeline owned and operated by the Kurdistan Regional Government. However, after the September independence referendum in Kurdistan, Iraqi troops took control of disputed Kirkuk, which falls outside of the autonomous region’s boundaries, and the surrounding fields.

The Iraqi army’s offensive against Kurdistan also involved an Iran-trained militia, the Hashd al-Shaabi. Iran, like Turkey, strongly opposed any attempt at Kurdish independence, in line with Baghdad’s attitude to the issue. Both Iran and Turkey have significant Kurdish minorities.

A statement from the secretary-general of the Iran-Iraq Chamber of Commerce, however, suggests that the negotiations for shipping crude from Kirkuk fields to the Kermanshah refinery might be just a warning shot at the Kurdistan government.

"Should the Kurdistan Regional Government fail to reach an agreement with the central government in Baghdad on oil export policy, the transfer of Kirkuk crude to Iran will be feasible," Hamid Hosseini said earlier today, adding that "If crude transfer venture from Kirkuk is launched, close to 650,000 barrels of oil can be delivered to Iran per day." 

Related: Russia Aims To Dominate Middle East Energy

The official went on to add that this increase in shipments would necessitate the construction of a new pipeline from Iraq’s main oil export terminal in Basra to Iranian Abadan.

With the Kurdistan autonomous region heavily dependent on oil revenues, chances are the government will seek to come to a mutually beneficial agreement with the central government in Baghdad. Yesterday, the region’s Prime Minister, Nechirvan Barzani acknowledged the adverse effect that the Iraqi offensive has had on the region’s oil income, saying it had fallen to less than 50 percent of what it used to be before October 16, when the offensive was launched.

By Irina Slav for Oilprice.com

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