Turkey Defers to Baghdad on Kurdish Oil

The package includes an agreement on multibillion-dollar oil pipelines connecting northern Iraq with Turkey, which would enable the KRG to eventually export up to 2 million barrels of oil per day when fully implemented, making it an important regional energy player independent of the central government.

Currently the KRG is using the existing pipeline from Kirkuk — which technically remains under Baghdad’s control — to Ceyhan where Turkey has a storage capacity of 2.5 million barrels set aside for Kurdish oil. As of December, when the KRG’s connection to the Kirkuk pipeline was opened, the 425,000 barrels of Kurdish oil has been stored in Ceyhan waiting to be sold on world markets.

In the meantime, the KRG has been trucking small amounts of crude oil to Turkey for domestic consumption, but this is considered to be negligible compared with the potential that exists if the proposed system of pipelines is fully up and running.

There has been little love lost between the predominantly Sunni government of Prime Minister Recep Tayyip Erdogan and the predominantly Shiite Maliki government because of Turkey’s cooperation with the KRG in the energy field, as well as sectarian-based differences over Syria.

Ankara nevertheless appears reluctant to aggravate the situation with Iraq further given the increasing instability and turmoil in the region due to the Syria crisis, which has also left the two countries facing similar threats, especially from radical jihadist groups such as the Islamic State of Iraq and al-Sham (ISIS).

There is also the estimated trade of about $12 billion annually between Turkey and Iraq that experts say has to be factored in by Ankara. Foreign Minister Ahmet Davutoglu visited the Iraqi capital in November for talks designed to smooth the path for a rapprochement between the sides and to lay the groundwork for a visit by Erdogan to Baghdad and Maliki to Ankara.