Following reports that the Kurdistan Regional Government (KRG) had suspended oil exports through the Iraq-Turkey pipeline, the KRG has issued the following statement:
The Ministry of Natural Resources of the Kurdistan Regional Government would like to state that there has been no policy decision for suspending oil exports from Kurdistan via the Iraq-Turkey pipeline. Over the last two days, the export pipeline operated by North Oil Company (NOC) experienced serious technical difficulties, temporarily causing disruption of the exports from the Kurdistan Region. As such, all the false assumptions and accusations of export suspension should be totally discarded. The KRG remains committed to its interim agreement with the federal government of Iraq for exports of oil from Kurdistan’s fields, until a permanent solution is reached based on the Constitution.
Oil export started in early February this year. The budgeted and agreed average export volume was set at 100,000 barrels per day. On average over the last seven months, the Kurdistan Region has so far achieved above 130,000 barrels per day. The export initially started at 75,000 barrels per day, and then peaked in late June/early July at 175,000 barrels per day.
Recently there have been a number of technical difficulties resulting from the management of the pipeline and the pumping export system operated by the Kirkuk-based North Oil Company (NOC).
The past difficulties included unexpected daily shutdowns due to the lack of sufficient volumes to be pumped from the NOC producing fields. More recently, these daily shutdowns became irregular, unannounced and disruptive to the KRG’s system of export, resulting in some cut backs by the Kurdistan Region oil exporters.
More importantly, just recently a more serious operating malpractice has occurred in the NOC export system. The system has normally been operating at pressures ranging from 16 to 20 Bar. Accordingly, the KRG connecting export system into the NOC system has been tuned and maintained to cope with these levels of operating pressures. However, over the last few days the operating pressure of the NOC system was unexpectedly increased to 40 Bars (more than double). This was done without any prior notice or warning, and has caused a dangerous level of back pressure on the KRG export system. This in turn resulted in the automatic shutdown of the main oil export from the Region, which handles around 100,000 barrels of oil per day.
Currently we are carrying out some integrity tests on the system and we hope to be able to resume the exports gradually over the next day or so.
The KRG Minister for Natural Resources has already spoken to the Oil Minister in Baghdad and reported to him these unexpected serious problems. The Oil Minister has agreed to look into them and to have more cooperative contacts to avoid similar problems in the future.
(Sources: KRG, Bloomberg)