Turkey has proposed a new energy cooperation deal to Iraq that expands on their previous relations in that sector, a government official in Baghdad told Reuters following the news that Turkey was looking to renegotiate a decades-long agreement with Iraq for oil transport.
On Monday, the Turkish government said it would not seek to renew the pipeline deal after its expiration a year from now.
The original agreement, first inked in 1973, concerns the pipeline carrying oil from the semi-autonomous Iraqi region of Kurdistan to the Turkish port of Ceyhan on the Mediterranean. Flows along the Kirkuk-Ceyhan pipeline, which has a capacity for 1.6 million barrels daily, have now been suspended for two years amid a financial dispute between Ankara and Baghdad.
The shutdown followed an International Chamber of Commerce court ruling in favor of Baghdad in a case against Turkey that claimed that the latter should not have allowed for the flow of oil from Kurdistan to Ceyhan without the express approval of the government in Baghdad.
Initially, Turkey said it would abide by the court’s decision, but later, the Turkish Ministry of Energy and Natural Resources said that the court had, in fact, ruled that Iraq should compensate Turkey for violating an oil export deal the two countries had.
The new proposal, per that Iraqi official whom Reuters did not name, includes cooperation in oil, gas, and electricity. “The Ministry of Oil is in the process of reviewing the draft agreement sent by the Turkish side and negotiating with them regarding it to reach a formula that serves the interests of Iraq and Turkey,” the official said.
Meanwhile, oil production in Kurdistan is suffering sizable disruptions resulting from drone attacks believed to be carried out by Iran-affiliated groups in the semi-autonomous region. So far, these attacks have affected some 200,000 barrels daily in production.
By Charles Kennedy for Oilprice.com
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