Iraq halted crude exports from the semi-autonomous Kurdistan region and northern Kirkuk fields yesterday, an oil official told Reuters, after the country won a long-standing arbitration case against Turkey.
The decision to stop shipments of 450,000 barrels per day (bpd) of crude relates to a case from 2014, when Baghdad claimed that Turkey violated a joint agreement by allowing the Kurdistan Regional Government (KRG) to export oil through a pipeline to the Turkish port of Ceyhan.
Baghdad deems KRG exports via Turkish Ceyhan port as illegal.
The International Chamber of Commerce ruled in favour of Iraq on Thursday, Iraq’s oil ministry confirmed on Saturday.
Turkey has informed Iraq that it will respect the arbitration ruling, a source said.
Turkish shipping officials told Iraqi employees at Turkey’s Ceyhan oil export hub that no ship will be allowed to load Kurdish crude without the approval of the Iraqi government, according to a document seen by Reuters.
Turkey subsequently halted the pumping of Iraqi crude from the pipeline that leads to Ceyhan, a separate document seen by Reuters showed.
On Saturday, Iraq stopped pumping oil through its side of the pipeline which runs from its northern Kirkuk oil fields, one of the officials told Reuters.
Iraq had been pumping 370,000 bpd of KRG crude and 75,000 bpd of federal crude through the pipeline before it was halted, according to a source familiar with pipeline operations.
“A delegation from the oil ministry will travel to Turkey soon to meet energy officials to agree on new mechanism to export Iraq’s northern crude oil in line with the arbitration ruling,” a second oil ministry official said.
Iraq will discuss with the relevant authorities ways to ensure the continuation of oil exports through the Turkish port of Ceyhan and state-owned SOMO’s obligations with oil companies, Iraq’s oil ministry said in a statement.
The ruling, in which Turkey has been ordered to pay Iraq around $1.5 billion before interest, covers the 2014-2018 period, according to a source.
A second arbitration case, which the source expects to take around two years, will cover the period from 2018 onwards.
The final hearing on the arbitration case was held in Paris in July 2022, but it took months for the arbitrators, the secretariat of the arbitration court and the International Chamber of Commerce to approve the verdict, the source familiar with the process said.