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Page added on August 23, 2014
Kurdish Oil Breakthrough Said to Enable Quadrupled Export
Iraq’s Kurds, who have defied the central government by selling oil independently, are working to quadruple the capacity of their export pipeline within months, according to an official with knowledge of the situation.
The Kurdistan Regional Government, or KRG, more than doubled daily capacity to 300,000 barrels on its pipeline to Turkey as of yesterday with installation of a new booster station at Fishkabur, the official said, asking not to be named because of policy. The region is considering a fourth booster to allow delivery of as much as 500,000 barrels a day to the Mediterranean port of Ceyhan within as little as three months, he said. The KRG didn’t answer phone calls to its press office outside working hours today.
The KRG’s efforts to export their own crude has provoked legal action by authorities in Baghdad and fanned speculation that the semi-autonomous region will pursue greater independence. Their new exports, expanding even as Kurdish forces combat an Islamist insurgency in territory nearby, are reaching what the International Energy Agency says is an oversupplied global market where the return of lost Libyan supplies pushed prices to a 14-month low.
“The Kurds are getting more autonomy and can rely more on their production, so we’re going to see more supply coming out of Iraq,” Hakan Kocayusufpasaoglu, chief investment officer at Archbridge Capital AG, a Zug, Switzerland-based hedge fund, said by e-mail. Global supply is expanding as more oil comes from “areas that were causing problems last year and early this year,” he said.
More Autonomy
The export plans come after explorers including Chevron Corp. (CVX) and Afren Plc (AFR) evacuated staff and halted drilling in the Kurdish region as fighters from the Islamic State advanced through northern Iraq. DNO ASA, the Norwegian company that operates the Tawke field, said yesterday that it may need to push back production-growth targets for Kurdistan after companies that provide it with oilfield services evacuated workers.
The explorer, which exported 35 percent of its output in the second quarter through the pipeline to Turkey, said it may fail to reach a goal of boosting capacity at Tawke to 200,000 barrels a day by year-end, after reaching a peak of 130,000 barrels a day. At the same time, DNO said the KRG had cleared it and other producers to export oil on their own.
Economic Lifeline
For the Kurds, whose armed forces have played a central role in countering the Islamist insurgency in Iraq over the past three months, oil is an economic lifeline as they consider moves toward greater independence.
“The increased capacity is needed to allow delivery to Ceyhan of growing volumes from the Taq Taq and Tawke fields,” Bloomberg oil strategist Julian Lee said today. The “300,000 barrels per day through the Kurdish pipeline would boost Iraq’s exports by 12.5 percent and could make an important contribution to revenue, if accepted by Baghdad,” he said.
Turkey has ignored objections by Iraq’s central government, which says the oil exports are illegal and must be stopped. Seven tankers have so far loaded 6.5 million barrels of Kurdish oil transported to the Ceyhan terminal, Turkey’s Energy Minister Taner Yildiz said on Aug. 18. Iraqi Kurds have also separately been exporting crude on trucks via Turkey.
Baghdad has tried to block the KRG from exporting oil on its own, citing a constitutional clause making the central government responsible for oil shipments and revenues. A tanker carrying Kurdish crude has been waiting off the coast of Texas since July after a magistrate ordered the cargo be seized should it enter U.S. territorial waters, in response to a legal complaint from Iraq’s central government.
“The Kurds are becoming more confident of their ability to export crude independently of Baghdad,” said Lee, who writes for First Word and whose views are his own. “At least four of the seven tankers that loaded Kurdish crude from Ceyhan have successfully discharged their cargoes, suggesting that willing buyers are starting to emerge.”
13 Comments on "Kurdish Oil Breakthrough Said to Enable Quadrupled Export"
Davy on Sat, 23rd Aug 2014 7:38 am
This is a critical regional oil player that must be protected and support if we can realize as a global community all of our livelihood depends on every available significant oil supply source. In a few short years or maybe months the oil supply situation could go critical. The current appearance is we are moving in dangerous direction with both above ground and below ground dynamics. The global financial system tmay not survive another oil supply shock. I am a mild doomer with some hope. I am hoping for a few years for preparation. If we are lucky a significant crisis will develop to change lifestyles and attitudes everywhere. In the developed west we have to lower consumption and in the developing countries manage population. We have to do something and only global crisis will allow this. If we have a crash course in collapse we may not survive.
steve on Sat, 23rd Aug 2014 9:34 am
I wish I could have your optimism Davy, I read Gails Our Finite world too much and if you scroll down and read the comment section it is hard to have any hope…..But I think it is one thing to predict collapse but it is another to predict what will happen inside the collapse itself…We can see the hurricane we just don’t know if it will level us….
Davy on Sat, 23rd Aug 2014 9:49 am
Steve, I been at this for years. This tends to mellow you as a person and I am in my 50’s further mellowing my attitudes. Good analogy with the hurricane. That is dead on.
Plantagenet on Sat, 23rd Aug 2014 9:58 am
If ISIS doesn’t take over Kurdistans oil production then the Iraqi government will.
MKohnen on Sat, 23rd Aug 2014 11:03 am
Plant,
From recent evidence, the Iraqi army doesn’t seem to be in a position to take over anything, including Baghdad. If it weren’t for the Shi’ite militias, the Iraqi capitol would already be in IS hands.
Norm on Sat, 23rd Aug 2014 11:37 am
Looks a lot like road warriors.
They have dune buggy chases in the sandy desert, they got their own refinery, they fight over gasoline and oil….
Could we make Mel Gibson their new President? I hear he is unemployed.
Plantagenet on Sat, 23rd Aug 2014 11:47 am
@MKohnen
Of course ISIS defeated the Iraqi army. But think a bit more longterm— if the Obama administration re-arms the Iraqi government to fight ISIS, it won’t be long until the Iraqi army will also be pressing its case to retake control of Kurdistan and its oil.
rockman on Sat, 23rd Aug 2014 4:28 pm
“…if the Obama administration re-arms the Iraqi government to fight ISIS…” Hmm…the $billions in arms the US had already given the Iraq army didn’t seem to help them much. But it did provide ISIS with nice boost in their inventories. LOL.
It might be more cost efficient to hire mercs to work with the Kurds to handle ISIS. Then once they are defeated we’ll pay the mercs to take out the Kurds and hand it all back to Baghdad.
Or maybe just pay the mercs to take out Baghdad, run the Chinese out and turn the country over to ExxonMobil et al. IMHO that would make more sense then everything we’ve done there over the last 20 years.
steve on Sat, 23rd Aug 2014 7:05 pm
For some reason the administration does not want to wipe out ISIS so they are doing as little as possible to make it look like they are doing something.
Makati1 on Sat, 23rd Aug 2014 9:08 pm
ISIS is doing what the US couldn’t … invade Syria. I have not seen any proof that the US wants ISIS taken out, or even controlled, at this point. They are too useful.
The US/NATO war with Syria is only on hold. The DC Mafia is still working on an excuse/reason to invade Syria. Putin frustrated the last attempt. I think he will frustrate this one also.
Turkey is moving East away from Western influence. Another hit on Western power in the area. A NATO country jumping ship may start a flood of changes. We shall see.
tedD on Sat, 23rd Aug 2014 9:18 pm
The Kurds are turning out to be Zionist
and American puppets and they also collaborate in the murder of the Iraqi people. The Zionist and their puppets
are destined to be burned in the oil.
eugeni on Sun, 24th Aug 2014 5:51 am
Dont’ forget Iran… the last oil country from the “evil axis” that hasn’t been destroyed yet. So to arm the kurds to fight ISIS (armed by who?) it’s a good way to prepare the road for a armed resistant in Iran.
Beery on Sun, 24th Aug 2014 7:57 am
You know, I’m working on being a multi-millionaire in 5 years. I reckon on increasing my wage-earning capacity by a factor of 20,000 annually. Last week I spent $3000 during my vacation – if I can just multiply that level of spending by a factor of 25, I’m guaranteed to be a multi-millionaire! It’s gonna be fricken awesome!