Turkey remains unfazed by Arbil-Baghdad oil row

ISTANBUL- Hürriyet Daily News

Employees work at the Tawke oil field in northern Iraq. The self-ruled region says it has halted oil exports over a payment row with the central government in Baghdad. AP photo

A recent decision by the autonomous administration in northern Iraqi Kurdistan to halt oil exports over a payment dispute with Baghdad will not have an adverse effect on Turkey’s domestic market, a top minister and business professionals said yesterday.

Energy Minister Taner Yıldız said Turkey buys a small amount of crude from Iraq. “There will be no difficulty receiving the crude oil from Iraq,” Yıldız told reporters yesterday in Ankara. However, there will be no decrease in oil prices unless political tension in the Middle East subsides, he added.

Turkish oil refiner Tüpraş will purchase approximately 1 million tons of crude oil from Libya, as well, Yıldız said. “With this purchase, Turkey will meet its domestic demand as well as helping Libya normalize,” the minister said.

No cut will be made in the transportation of crude oil via the Kerkük-Yumurtalık pipeline, nor has any official statement been received regarding the issue, an official at Botaş, the state-run pipeline company, told the Hürriyet Daily News yesterday. Turkey imported more than 147 million barrels of oil from Iraq in 2011, according to the website of Botaş.

The Kurdistan Regional Government (KRG) announced April 1 that it had stopped crude exports, arguing that the central government in Baghdad had withheld $1.5 billion owed to foreign oil companies working in the region.

“There is no direct oil transport to Turkey via a pipeline from northern Iraq, only tankers carrying crude oil through the border, which does not account for an important amount in terms of the security of Turkey’s oil supply,” a leading business professional told the Daily News, speaking on condition of anonymity. It is the Baghdad government, not northern Iraq, which sells oil to Turkey via the Kerkük-Yumurtalık pipeline, the source said, telling that the row will not affect Iraq’s exports to Turkey.

However, spot oil prices could rise by $1-2 per barrel, as Tüpraş buys a large amount of oil from the spot market. The growing tension in Iraq adds to the deepening instability in global energy markets stemming from the ongoing friction regarding Iran. The minutes of a Central Bank Monetary Policy Committee meeting last week released yesterday said “uncertainties regarding oil prices keep the upward risks in the inflation outlook alive.”

‘Arbil smuggling oil’
Meanwhile, the row between the KRG and the central government took another turn as Iraqi officials in Baghdad said that Arbil owes the government more than $5 billion and is “smuggling the oil it produces” through Iran, Agence-France Presse reported.

“Kurdistan does not have any refineries to refine oil, so the greatest part is being smuggled outside Iraq, especially through the Iranian border,” AFP quoted Iraq’s Deputy PM for Energy Affairs Hussein al-Shahristani as saying at a news conference.

Servet Yeşilyurt contributed to this report from Istanbul.