Iraq wins Kurdish oil arbitration can against Turkey

(Bloomberg) – Iraq’s oil ministry welcomed an arbitration ruling in its long-running dispute with Turkey centered on crude oil exports from the semi-autonomous Kurdish region and said it would discuss “mechanisms” to keep oil flowing.

The International Chamber of Commerce’s International Court of Arbitration decided in Iraq’s favor on March 23, Iraq said.

The ministry “will discuss mechanisms for exporting Iraqi oil through [Turkey’s] Ceyhan port with the concerned authorities in the Kurdistan region” as well as with Turkey, in a manner that guarantees exports will be sustained and international commitments met, it said Saturday in a statement.

A document seen by Bloomberg News and issued by the Iraqi shipping office at Turkey’s Ceyhan port said Turkey will no longer allow crude oil loading for the benefit of the Kurdistan region without the consent of Iraq’s federal authorities. The document cited an official at Turkey’s state-run Botas company, alerting the Iraqi shipping office.  

In the arbitration case, which has been running in the Paris-based court for almost nine years, Iraq claimed that Turkey violated a 1973 pipeline transit agreement by allowing crude from the Kurdish region to be exported without Baghdad’s consent. 

The person familiar with the ruling also said that since the last tanker loaded on Friday, no more vessels had reported to haul crude from the Kurdistan region. Turkey has stopped receiving oil via the Kurdistan pipeline, the person said.

Calls to officials at the Kurdistan regional government weren’t immediately returned. Argus first reported the news late Friday, citing a person with knowledge of the matter.

Over 1 Mbpd passed through the Ceyhan terminal in January, or 1% of global supplies, according to data compiled by Bloomberg. Baghdad sends 75,000 bpd to Ceyhan, while the Kurdish regional government sends about 400,000 bpd.