The Prime Minister of Kurdistan Region of Iraq announced on Tuesday the approval of federal authorities' request to allow oil to flow through the region's pipeline to Turkey's Mediterranean port of Ceyhan.
Federal authorities in Baghdad have pushed for oil exports to resume through the Kirkuk-Ceyhan pipeline, which could pump about 450,000 barrels per day, helping mitigate the effect of the closure of the Strait of Hormuz.
Iran has prevented ships from passing through the waterway, forcing Iraq to cut output to 1.4 million bpd, less than a third of the volume reported before the conflict began. Exports, which averaged 3.4 million bpd before the war, have been brought to a halt.
The KRG has said it will not agree to pump oil until Baghdad lifts a customs policy imposed in January. The new system is part of a wide reform plan introduced by Baghdad to impose more control on imports and tariffs and eventually end money laundering and corruption.
Earlier on Tuesday, Baghdad warned the Kurdish Regional Government it faces legal action over its refusal to allow pumping oil through the the Kurdistan Export Pipeline. Baghdad accused Erbil of breaching the Iraqi constitution.
"Given the extraordinary circumstances facing the country, and the responsibility we all share to get through this difficult chapter, we have decided to allow oil to flow through the Kurdistan Region's pipeline as soon as possible," Prime Minister Masrour Barzani said in a statement.
"In parallel, our discussions with Baghdad will continue with urgency to lift the restrictions on imports and trade into Kurdistan Region."
The KRG also said last week that "outlawed militias" made oil, gas and energy fields "targets of their attacks", taking production offline and leaving "no oil available for export". It added that Baghdad has taken "no effective measures" to stop the assaults and claimed "many of the perpetrators ... receive salaries and support from Baghdad".
The discussions with Baghdad will also aim "to secure guarantees for oil and gas companies so they can safely resume production", Mr Barzani added.
Baghdad accused the Kurdish authorities of “breaching the constitution”, specifically articles 110, 111 and 112, which grant the federal government control over oil and gas resources.
"We urge Erbil to reconsider its position and, if refused, the federal government will take all necessary legal actions," the ministry said in a statement. "The KRG's actions are irresponsible and harm the interests of all Iraqis, including those in Kurdistan."
It called on parliament to address the issue. "We urge MPs to consider the national interest and the facts on the ground," the ministry added.
Meanwhile, Baghdad is in contact with Iran to allow some oil tankers to pass through the strait, Iraq’s state-run news agency quoted the Oil Minister Hayan Abdul Ghani as saying on Tuesday.
Iraq is also exploring overland routes, looking to move between 100,000 bpd and 200,000 bpd to international markets through Turkey, Syria and Jordan.
It also is revamping its Kirkuk-Ceyhan pipeline to pump crude to Turkey's Mediterranean port, bypassing the Kurdistan Export Pipeline. The Iraq-Turkey pipeline, a major energy artery connecting the Kurdistan region's oilfields to Turkey, has been largely idle for more than a decade owing to damage caused by ISIS, as well as other armed groups.
Mr Ghani said on Monday that the line “is currently undergoing final inspection and qualification, and only about 100km remain to be tested hydrostatically within a week”.
Iraq can pump between 200,000 and 250,000 bpd through the route once operational, he added. That could be boosted by another 200,000 bpd from oilfields in Kurdistan, he said.
