Iraq's Kurds add pipeline capacity to export Kirkuk oil

DUBAI (Bloomberg) -- Iraq’s semi-autonomous Kurds upgraded their oil export pipeline to accommodate future production growth from their region as well as from the contested Kirkuk area controlled by the central government in Baghdad.

The Kurdistan Regional Government completed improvements to the pipeline to the Mediterranean port of Ceyhan, Turkey, by installing another pumping station in the Shaikhan area, the KRG’s Ministry of Natural Resources said on its website. The link’s capacity increased to 1 MMbpd from 700,000, it said.

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The KRG currently exports more than 400,000 bopd, according to the statement. “This extra capacity will accommodate future production growth from KRG producing fields and can also be used by the federal government to export the currently stranded oil in Kirkuk and surrounding areas,” the KRG said. On his first day in office last week, Iraqi Oil Minister Thamir Ghadhban said Baghdad plans to start talks with Kurdish authorities to discuss oil exports. KRG’s more consistent and timely payments to oil companies producing in region has encouraged investment in its fields, stabilized production and paved the way for further output increase in 2019.

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The Kirkuk area in northern Iraq produces about 230,000 bpd for local refining and power generation only and hasn’t exported crude since Iraqi forces retook the area from Kurdish fighters in October 2017, following the defeat of Islamic State militants. Kirkuk shipments by truck to Iran halted three weeks ago in line with U.S. sanctions.

Kirkuk had exported crude through the Kurdish-operated pipeline until shipments stopped due to a dispute over oil payments between the central government and the KRG. Iraq, the second-biggest producers in OPEC, pumps most of its 4.69 MMbpd from fields in the south of the country and ships it from the Persian Gulf port of Basra.