Iraqi Prime Minister Mohammad al-Shia al-Sudani said that the operation of the Iraq-Turkey oil pipeline was postponed due to disagreements over the cost.
Speaking to Bloomberg International in Baghdad, Prime Minister Baghdad could not agree on how much he would pay for the production of international oil companies operating in the north of the country. While the federal government's budget allows it to pay $8 per barrel, the Iraqi Kurdish Regional Government pays $26 to companies. The dispute has hit oil production in the region and delayed the pipeline's re-operation.
The suspension of operations in the Iraq-Turkey oil pipeline, where nearly half a million barrels of oil are put on the market per day, causes billions of dollars in lost revenues. However, the opening of the pipeline could lead to a dilemma for Iraq, which has repeatedly said it will compensate for overproduction and does not adhere to the OPEC+ production limit due to urgent financial needs. Failure to comply with the production limit has become a matter of debate with Saudi Arabia, the de facto leader of OPEC+. We are committed to complying with OPEC decisions and maintaining prices to balance the interests of users and producers.
Oil shipments from the Kirkuk-Ceyhan pipeline were halted in March last year after International Arbitration fined Ankara-Erbil for violating Baghdad's rights under the 2014 oil export agreement.
In October, the Turkish government said it was ready to restart the pipeline.
However, financial and legal problems arose regarding the payment of fees to companies for costs:
International firms also demanded past debts of $1 billion for production between September 2022 and March 2023.
With the suspension of exports, companies are producing crude oil on a local basis. Iraqi officials have reported that this production has caused problems in complying with the OPEC quota. According to data compiled by Bloomberg, Iraq produced 4.32 million barrels last month, exceeding the daily production limit of 4 million barrels. It is stated that the country will gradually increase its production limits from December.
Sudani aims to increase production in the long term due to the damage caused by the years-long war in the country. In August, energy giant BP signed an agreement to support production growth in Kirkuk. Iraq is also repairing and developing damaged refineries to help reduce fuel imports.
Because of the wars that have been going on for the last 40 years, we have been late in using the wealth we have in terms of Iraq's natural gas and oil in the right way. Now we are looking at how we can effectively use the wealth we have. ⁇ He spoke in the form.
Sudani said his administration is considering using about 40 percent of Iraq's oil revenues as investments to revive the non-oil sector. Sudani added that a planned trade corridor extending from the city of Basra in the south of Irak ⁇ to Turkey ⁇ and from there to Europe ⁇ is a dream ⁇ for his country.
