Iraq's oil pipeline closure costs $4 Billion; Producers await resolution

Shafaq News/ An economic report has revealed that the closure of the Iraqi oil export pipeline to the Mediterranean coast of Turkey in March has cost producers and the Iraqi state's treasury approximately $4 billion.

According to Bloomberg, producers in the region, including DNO ASA, Genel Energy Plc, Gulf Keystone Petroleum Ltd, HKN Energy Ltd, and ShaMaran Petroleum Corp, are awaiting an agreement with Turkey to restore production, which is currently sufficient to meet local demand.

Association of the Petroleum Industry of Kurdistan (APIKUR) expressed concerns that the losses will continue despite initial talks between the Iraqi and Turkish governments to resolve the issue. Gulf Keystone, for example, saw an 8.8% drop in shares in London, and material uncertainty exists regarding the company's future if it cannot produce enough oil for sale.

The pipeline's closure forced Kurdistan Region producers to reduce production. Turkey stopped the flow through the pipeline to the port of Ceyhan following an international court's decision ordering Turkey to pay Iraq about $1.5 billion as compensation for transporting oil without Baghdad's approval in the past. Ankara aims to settle the dispute through negotiation before reopening the pipeline.

Producers have stated that they will not resume oil production for export until clear arrangements are made with the federal government in Baghdad regarding future payments. The Baghdad government insists on being the sole legal entity for selling oil pumped into the country.

To generate some income, companies like Gulf Keystone have resumed production for domestic consumption. In August, Gulf Keystone pumped around 16,300 barrels of oil daily for domestic use, compared to the normal production level of approximately 50,000 barrels per day.