Iraq plans to sign a one-year agreement to continue crude oil flows through a pipeline to the Turkish port of Ceyhan. The Opec member is looking for alternative routes to export Iraqi crude as the Strait of Hormuz remains effectively closed owing to the US-Iran war.
Iraqi Oil Minister Bassem Khudair is to travel to Turkey on Saturday to sign the agreement, which provides an export capacity of 750,000 barrels per day, the Iraqi News Agency reported, quoting a statement from the ministry.
The development comes after a decades-long bilateral arrangement allowing the operation of Baghdad's only functioning export pipeline from Kirkuk to Ceyhan expired on Monday.
“It is a tripartite agreement that includes, on the Iraqi side, the State Oil Marketing Company and the North Oil Company, and on the Turkish side, the company [BOTAS],” ministry spokesman Salim Al Rikabi told the agency.
He added that the agreement is a prelude to a comprehensive deal aimed at raising export capacity to more than one million bpd after the completion of the Basra-Haditha-Kirkuk-Ceyhan pipeline.
The regional conflict has led to a sharp supply collapse for Iraq. Its output fell 66 per cent, the steepest drop among Opec+ members. Production fell from 4.3 million bpd to 1.4 million bpd in May, and flows through the Ceyhan pipeline dropped from 3.5 million bpd before the war to about 200,000 bpd.
Plans for new routes
In May, Iraq announced the start of work on a new pipeline linking Basra to Haditha with a capacity of 2.5 million bpd, as it seeks new routes to export crude.
About $1.5 billion has been allocated for the project and the date for its completion depends on the availability of further budget allocations, the INA reported in May.
The 700km pipeline is to transport crude for export through routes such as Baniyas in Syria, Ceyhan in Turkey and Aqaba in Jordan, while also supplying refineries across southern, central and northern provinces of Iraq.
Last month, Iraq’s cabinet also approved measures including reviving plans to build a new pipeline through Syria to the Mediterranean, aimed at diversifying crude export routes and boosting production.
