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Pipeline Outage Almost Halves North Iraq Feb Exports

Posted by March 7, 2016

Oil exports from northern Iraq fell by almost half to an average of 350,067 barrels per day (bpd) in February due to an outage of the pipeline to Turkey, the Kurdistan region's Ministry of Natural Resources said on Monday.

The nearly three-week outage is a big blow to Kurdistan, an autonomous region within Iraq that depends on revenue from its oil exports and is in the throes of an economic crisis induced by low crude prices.

In February, the region received $303.9 million in revenue from its exports, the ministry said - less than half the 890 billion Iraqi dinars ($760 million) needed to cover a bloated public payroll.

Of that revenue, $70.9 million was allocated for producers, to which the region is heavily indebted.

It is a rude awakening for the Kurds, who enjoyed an economic boom until 2014 when the Baghdad government slashed funding to their region in a still unresolved dispute over how to share revenue and control over the country's resources.

War with Islamic State and an influx of people displaced by violence in the rest of Iraq compounded the problem, which is also the result of a decade of mismanagement and corruption.

The Kurds began ramping up independent oil sales last June to a peak of around 600,000 bpd in January in an effort to bridge the gap, but plummeting energy prices meant it fell short, and the pipeline outage has widened it further.

The pipeline, which carries crude from fields in the Kurdish region and Kirkuk to the Mediterranean port of Ceyhan has been idle since Feb. 17 as a result of "circumstances" inside Turkey, the ministry said.

Turkey's energy ministry said on Feb. 27 it had begun work to repair the pipeline, and an industry source based in the Kurdistan region told Reuters on Sunday the work would be completed "in a day or two".

The pipeline runs through Turkey's restive southeast, which has seen the worst violence since the 1990s after a two-year ceasefire between the government and Kurdish militants broke down last July.

Turkey has accused the Kurdistan Workers' Party of blowing up the pipeline, but the militant group denies responsibility.

 

By Isabel Coles

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