Iraq's Kurdistan Begins Independently Exporting Crude Oil Through Turkey

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Researched by Industrial Info Resources (Sugar Land, Texas)--Iraq's Kurdistan Regional Government (KRG) has started to export crude directly to world markets through Turkey. "The KRG gave us permission to start exports from the Taq Taq oil field," said Mehmet Sepil, the president of Anglo-Turkish oil firm Genel Energy (LN:GENL), said to Reuters News Agency.

With pipeline exports from Kurdistan dwindling in recent weeks on the back of non-payments, it appears that the KRG has lost patience with Baghdad and is now prepared to sanction direct crude exports via truck through Turkey. Condensate volumes from the Khor Mor gas field have been exported via Turkey since at least October, with the KRG receiving refined product in return.

"The same mechanism, at least in the near-term, is likely to be in place for Taq Taq's truck-based crude exports," said Phil Corbett, an analyst at Deutsche Bank in London. "The key will be Baghdad's reaction--it has apparently tolerated the Khor Mor exports, but crude might be a different matter, with this the latest move in the chess game for control over Kurdistan's hydrocarbon wealth," he said.

The KRG suspended its exports in December, as Baghdad withdrew payments to oil companies operating there. The KRG sees production from the region, now about 200,000 barrels per day, rising to 1 million barrels per day by 2015 and 2 million barrels per day by 2019.

According to the Iraq Oil Report by the International Energy Agency, Iraq's oil production is expected to double to more than 6 million barrels a day by 2020. Iraq will be the world's second-largest oil exporter after Saudi Arabia by 2030s. For additional information, see October 11, 2012, article - Iraqi Oil Production Could Double to 6.1 Million Barrels in 2020, IEA Says.

Currently, Western oil majors like BP plc (NYSE:BP) (London, England), ExxonMobil (NYSE:XOM) (Houston, Texas), Eni SpA (NYSE:E) (Rome, Italy), Anglo-Dutch oil company Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) and Turkey's state-owned oil company Turkiye Petrolleri Anonim Ortakligi (Ankara, Turkey) operate in Iraq.

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