US hails Turkey-Iraq oil dialogue: Energy Secretary Ernest Moniz

ISTANBUL - Hürriyet Daily News

The US is pleased to see increased dialogue between Baghdad and Turkey, but any oil deal must be handled within Iraq’s constitutional structure, Moniz says. DHA Photo

Turkey and the Kurdistan Regional Government’s (KRG) increasing dialogue on the distribution of Iraqi oil to world markets through Turkey pleases Washington, U.S. Energy Secretary Ernest Moniz said.

Washington is pleased to see increased dialogue between Baghdad and Turkey and the oil deal must be decided on by the parties and should be dealt within the Iraq’s constitutional structure, said Moniz in response to the Hürriyet Daily News’ questions on Washington’s evaluation regarding the central government in Baghdad’s disapproving stance with the Turkish-Iraqi deal that would let the semi-autonomous region start piping oil to world markets, in a conference at Koç University in Istanbul on Nov. 22.

Turkish Energy Minister Taner Yıldız said on Nov. 21 at a joint press conference with Moniz that Turkish public and private companies located in northern Iraq and have signed contracts for oil fields in Arbil and the money generated from these transactions will be kept in a state bank. Turkey will send the receipts of each transactions to the central government in Baghdad. 

The Iraqi central government and autonomous KRG will share the money as per the ratio they will decide upon, according to Yıldız. 

Moniz also said the increase of production in shale oil does not mean the U.S. is removed from the global oil market, adding the U.S. is committed reducing oil dependency as well.

Kurdish oil to start flowing within weeks

Meanwhile, Iraqi Kurdistan’s oil exports may start flowing through its own pipeline via Turkey within weeks, and without necessarily agreeing on payment protocol with the Baghdad central government, the region’s natural resources minister Ashti Hawrami said, according to a Reuters report.

"We could even see flows before Christmas,” he told a conference in Istanbul on Nov. 21, bringing forward previous forecasts that the first flows would be early next year.

The 300,000 barrel per day (bpd) pipeline is being built by Iraq’s semi-autonomous KRG, which has proposed taking 17 percent of Iraq’s total oil revenues, based on an article in the country’s constitution.

Hawrami said Arbil would press ahead with exporting oil whether or not Baghdad agrees the payment plan. “We are not ignoring Baghdad but if nobody wants to speak with us, then that’s fine. We have been patient for ten years.”

Once the pipeline comes online the KRG will phase out exporting by road to the Mediterranean port of Ceyhan.

“A big part of our production will go into this oil pipeline,” Mehmet Sepil, president of the Anglo-Turkish oilfield operator Genel Energy, said on Nov. 22, reiterating oil would start flowing through the KRG pipeline within weeks.

He said Genel has the capacity to produce about 230,000 bpd at two of its fields - Taq Taq and Tawke - in Kurdistan. The company is at the exploration stage in other fields in the region.