Iraq's Kirkuk oil exports at risk as Kurds seize pumping station

DUBAI (Bloomberg) -- Iraqi oil shipments of about 105,000 bpd were halted briefly on Thursday after Kurdish troops seized control of a pumping station in disputed Kirkuk province and demanded that crude shipments to the country’s central government be stopped.

Oil from Kirkuk stopped flowing into a Kurdish-built export pipeline to Turkey after fighters loyal to the Patriotic Union of Kurdistan political party took control of the province’s main pumping station, Najat Hussein, a member of Kirkuk’s oil, energy and industry committee, said by phone. The shipments resumed several hours later, he said.

The PUK, one of two parties in the Kurdistan Regional Government, has controlled much of Kirkuk since sending forces to protect oil facilities there after Islamic State militants captured swathes of northern Iraq in 2014. Kirkuk lies outside the KRG-run Kurdish region and is a potential flashpoint between Kurds and Iraqi Arabs. The KRG struck a deal with the federal government in Baghdad last August to share revenue from Kirkuk oil exported through the Kurdish-operated pipeline.

By seizing the station that controls oil flowing into the export pipeline, the PUK was trying to pressure the federal government to allocate money to Kirkuk from sales of the province’s oil, Hussein said. The PUK will cut exports again if no agreement is reached within one week, he said. 

Iraq, the second-biggest member of the Organization of Petroleum Exporting Countries, pumps most if its crude at fields in the south and exports it by sea from the southern port of Basra. Total exports increased to 3.85 MMbpd last month, about 39,000 bpd more than in January, according to port-agent reports and ship-tracking data compiled by Bloomberg.