Iraq plans new pipeline exporting Kirkuk oil to Turkey

BAGHDAD

Iraq plans to build a new pipeline that will ship oil from Kirkuk’s oilfields to the Ceyhan port in Turkey, the oil ministry said on Nov. 26.

The new pipeline will replace an old and severely damaged section of the Kirkuk-Ceyhan pipeline. It will start from the nearby city of Baiji city and span until the Fish-Khabur border area with Turkey, the ministry said in a statement.

Iraq stopped shipping oil through the Kirkuk-Ceyhan pipeline in 2014 after the region was overrun by Islamic State of Iraq and the Levant (ISIL) militants and subsequently recaptured by U.S.-backed Iraqi forces over the past two years.

Oil minister Jabar al-Luaibi has asked the ministry to prepare to invite companies interested in building the new pipeline project, which will be implemented under an investment model build-operate-transfer, said the statement.

Exports from oilfields in Kirkuk have been on hold since Iraqi government forces took control of them from the Kurdistan Regional Government (KRG) last month in retaliation for a Kurdish referendum on independence which was widely opposed by Turkey, Iran and Western powers.

Iraqi oil officials accuse the KRG of not responding to requests made by the oil ministry to use the Kurdish pipeline to resume exports from Kirkuk.

The Kurdish region operates a pipeline that connects to the twin Kirkuk-Ceyhan pipeline at Khabur on the border with Turkey.

Iraq will invite foreign energy firms to bid for the exploration and development of nine new oil and gas blocks bordering Iran and Kuwait, the oil ministry said.

Iraq is to hold a press conference on Nov. 27 to announce details of the exploration blocks which are located in the south and east of the country and include one offshore block in the territorial waters, according to the statement.

“The ministry is targeting to boost both production and reserves of oil and gas in cooperation with international companies,” said the ministry statement.

Iraq has raised output rapidly in recent years with the help of foreign oil companies to become OPEC’s second-largest producer behind Saudi Arabia.

The blocks on offer are located in the provinces of Basra, Misan, Muthanna, Wasit and the Central Diyala province.

The contracts will be different from previous service contracts Iraq signed with foreign firms to develop the country’s giant southern fields, said the statement.

Under the service contracts used for Baghdad’s post-2003 bidding rounds, including those for its southern fields like Rumaila, West Qurna and Majnoon, the ministry pays companies a fixed dollar-denominated fee for every barrel of oil produced.

While the model worked well for Baghdad when oil prices were high, the slump in prices left Baghdad paying the same fees to firms like BP, Exxon, Lukoil and Shell at a time when revenue from oil sales was significantly lower.