Turkiye-Iraq Pipeline: End of an era, dawn of a new energy game

Shafaq News

Turkiye’s decision to formally terminate its decades-old oil pipeline agreement with Iraq marks a pivotal shift in regional energy dynamics. Despite multiple rounds of negotiations between Turkish and Iraqi officials to extend the arrangement, President Recep Tayyip Erdogan announced the deal’s formal end—effective July 27, 2026.

The move signals the closure of a longstanding framework and opens the door to a redefined partnership shaped by unresolved legal, economic, and political tensions involving Baghdad, Erbil, and Ankara.

A 50-Year Framework Nears Its End

The 1973 agreement established the legal basis for the Kirkuk–Ceyhan crude oil pipeline, allowing Iraqi exports to flow through Turkish territory to the Mediterranean. Ratified in 1975 and amended several times—in 1976, 1981, 1986, and most notably in 2010—the agreement underpinned Iraq’s northern export strategy.

The 2010 protocol extended the deal by 15 years and introduced a critical clause: commercial disputes would be resolved under French law via the International Chamber of Commerce (ICC) in Paris. This provision later became the cornerstone of Iraq’s legal challenge.

Between 2004 and 2015, the pipeline sustained more than 20 attacks in Nineveh and Kirkuk, often targeting key pumping stations such as IT-1, IT-2, Ain al-Jahsh, and Fishkhabour. The violence intensified during ISIS’s territorial gains in 2014, disrupting exports for prolonged periods.

Pipeline as Power: Sovereignty and Leverage

For Baghdad, the pipeline was more than infrastructure—it was a matter of sovereignty. The federal government insisted that only the State Oil Marketing Organization (SOMO) was legally authorized to export crude oil. After 2014, independent exports by the Kurdistan Regional Government (KRG) were repeatedly declared unconstitutional by Iraqi officials.

With federal flows disrupted by the conflict with ISIS, the KRG increasingly depended on the Kirkuk–Ceyhan line between 2014 and 2017, paying Turkish firms tens of millions of dollars annually in transit fees. But that reliance came at a cost. Sabotage-induced shutdowns cost the Region hundreds of millions in lost revenues—around $300 million between 2014 and 2015—worsening fiscal pressures and deepening disputes with Baghdad.

Turkiye, meanwhile, leveraged the pipeline as a source of income and geopolitical influence. As the transit state, Ankara profited from fees and strengthened its position as a regional energy hub—connecting Iraq’s northern resources to global markets while gaining influence over both Baghdad and Erbil.

Arbitration and Agreement Breakdown

In 2014, Iraq filed for international arbitration, accusing Turkiye of violating the 2010 protocol by facilitating unauthorized oil exports from the KRG. Baghdad claimed this undermined national sovereignty and resulted in economic losses through price manipulation and excess payments.

In March 2023, the ICC ruled in Iraq’s favor and ordered Turkiye to pay $1.47 billion in damages. Although the ruling did not cancel Ankara’s contracts with the KRG, it reaffirmed Baghdad’s exclusive authority to approve oil exports. Turkiye subsequently suspended flows through the Kirkuk–Ceyhan pipeline on March 25, 2023.

Invoking Article 9 of the 2010 amendment, which allows for termination with one year’s notice, President Erdogan later confirmed the deal would expire in 2026. Iraq’s Ministry of Oil stated that the Turkish decision aligned with the agreement’s legal terms and noted that negotiations for a new framework began in mid-2024.

Fiscal Strain and Political Pressure in Kurdistan

The suspension of exports had severe consequences for the Kurdistan Region. Revenues collapsed, public sector wages were delayed, and international oil companies operating in the Region were owed over $1.7 billion. The resulting financial distress triggered public protests in cities like Erbil and Al-Sulaymaniyah and exposed the Region’s continued vulnerability to infrastructure it does not control.

To manage the fallout, Baghdad and the KRG reached a new interim deal in July 2025. Kurdistan agreed to deliver 230,000 barrels per day to SOMO, while Baghdad resumed budget transfers and approved a fixed $16-per-barrel transport fee. While the deal provided short-term relief, it also reinforced the Region’s structural dependence on decisions made outside its borders.

Inside the Kurdistan Region, the crisis has intensified political pressure on the regional government. The halt in independent exports and the resulting fiscal strain have sharpened internal criticism and revived debates over energy strategy, transparency, and governance.

Pipeline Ready, Politics Frozen

Iraq’s North Oil Company confirmed that the Kirkuk–Ceyhan pipeline has been fully repaired, and three rounds of pumping tests validated its operational readiness. However, political disagreements have kept it offline. Despite its technical functionality, the pipeline remains caught in a broader diplomatic impasse.

Regional Energy Shifts and Strategic Diversification

With its northern exports suspended, Iraq has begun actively exploring alternative corridors. Talks have resumed on reopening the Kirkuk–Baniyas line through Syria, progress continues on the Basra–Aqaba route to Jordan, and Baghdad is examining the potential revival of the old Tapline through Saudi territory. These moves signal a deliberate effort to reduce dependence on the Turkish route and regain strategic flexibility.

For Turkiye, the decision to end the 1973 deal is part of a broader recalibration. Energy analyst Ali Abdullah noted that Ankara aims to break free from “legacy constraints” and reshape its ties with Iraq on modern, multidimensional terms—anchored in infrastructure, trade, and regional influence.

Power, Leverage, and Legal Overhang

Economic expert Hassan Youssef described Turkiye’s move as a “strategic lever.” According to Youssef, Ankara is seeking to widen the scope of negotiations beyond oil into broader domains of cooperation, including reconstruction contracts and commercial access.

He cautioned, however, that political disputes could delay a comprehensive resolution and stressed the need for sustained strategic dialogue to protect Iraq’s oil sector from prolonged uncertainty.

Corruption Allegations and Informal Networks

Further complicating the situation are longstanding allegations of corruption. Investigative reports, including by Nordic Monitor, claim that “Powertrans”—a Turkish firm allegedly connected to President Erdogan’s inner circle—benefited from exclusive contracts to operate the pipeline on behalf of the KRG. These allegations raise questions about past arrangements and the informal networks that have influenced energy policy decisions.

Between Transition and Uncertainty

For Baghdad, the end of the 1973 pipeline agreement offers a chance to break free from an outdated framework that limited its control over northern exports. But without credible alternatives in place, the fiscal and logistical impact remains significant.

Oil expert Hamza al-Jawahiri pointed out the economic rationale behind Baghdad’s shifting priorities: exporting via Ceyhan costs over $6 per barrel, while the southern route costs only $0.60—making the north unviable unless terms are renegotiated.

For the Kurdistan Region, the termination renews fiscal pressure and leaves the Region increasingly exposed to decisions made in Ankara and Baghdad. The export halt since 2023 has deepened structural dependency and strained political ties with the federal government.

As both Iraq and Turkiye prepare for a new phase of energy diplomacy, the broader stakes extend beyond bilateral agreements. The evolving dynamic will shape regional infrastructure investments, redraw energy alliances, and test whether legal frameworks or political leverage will define the next era of cooperation.

Written and edited by Shafaq News staff.