In a new development on the stalling oil pipeline between Iraq and Turkey, Turkish Energy Minister Alparslan Bayraktar on Wednesday said: “We have not yet received official confirmation from Baghdad on the intended resumption of oil flows from Kurdistan.”
Such a statement comes after only a few days of the announcement made by Iraq’s Oil Minister about Kurdish oil exports resuming next week as an indication that a lengthy dispute which greatly affected many economies and energy markets is drawing to a close.
“Nothing yet,” Bayraktar told Reuters reporters when questioned in parliament about when Iraqi oil flows might recommence and whether Turkey had received any formal communication from Iraqi authorities regarding the timeline.
The pipeline, which once transported approximately 450,000 barrels per day from northern Iraq to Turkey’s Mediterranean port of Ceyhan, has been inactive since March 2023. The shutdown happened after the International Chamber of Commerce (ICC) issued its ruling that forced Turkey to pay $1.5 billion in damages to Baghdad for enabling the unauthorized exports by the Kurdistan Regional Government (KRG) that took place from 2014 to 2018.
Multiple industry observers report that the suspended operation of the pipeline generated extensive economic problems throughout the Kurdistan territory. The financial plight of public employees continues as funding shortage from reduced essential service budgets deepens the regional economic weaknesses which stem from other economic challenges.
“The closure has blocked the KRG from receiving income from its main revenue source,” Dr. Hassan Mahmoud an expert energy economist from Baghdad University declared. Kurdistan faces major problems in providing basic government services because its oil exports stopped and this chain of economic complications surpasses simple energy policy challenges.
Iraq’s Oil Minister displayed positive sentiments as he revealed that better ties between Baghdad and Erbil administration set a foundation for ending the dispute. Throughout Kurdistan people reacted with optimism because the minister declared positive news that the economy needed badly.
The most recent comments from Bayraktar indicate there are either technical problems or diplomatic matters that prevent oil from traveling through the pipeline.
The second arbitration case concerning exports from 2018 onward has not yet been settled which might create challenges for completely reinstating pipeline operations. The continuous legal proceedings might demand more negotiation agreements between both parties until reaching a complete settlement.
Meryem Aydın a researcher at Istanbul Technical University states “The situation reveals how law disputes connect with both international diplomatic relations and autonomy concerns which have shaped Iraq’s oil sector since numerous years back.”
The pipeline dispute is only one dimension of the broader tensions — which have spanned decades — between Baghdad and Erbil over resource management and revenue sharing. The federal government has long insisted that all oil exports be done via federal channels, while the Kurdish authorities have demanded increased independence in managing their hydrocarbons.
Turkey, a key energy transit country for transporting Middle Eastern energy to European markets, understands that settling the dispute over the pipelines has strategic significance that extends beyond immediate economic factors.
Whether Iraq’s timeline for resumption will come into fruition remains to be seen, regional observers say, particularly as Turkey also appears to have not formally notified. The next few days will be crucial to whether oil does indeed start flowing next week as projected, or whether further negotiations will be needed to close lingering gaps between all the parties.
Market analysts say a successful negotiation could prevent further destabilization of regional oil prices and offer much-needed financial support across northern Iraq as the pipeline begins once more serving as a critical economic lifeline to the Kurdistan region.
