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Turkey to begin receiving Iraqi oil

The Iraqi government is to resume the transportation of oil to Turkey for the first time in eight months, following the settlement of a long-lasting dispute over revenue.

It began in March, when Baghdad’s oil shipments to Turkey were suspended due to several technical setbacks and fallout from a heated debate between the central and Kurdistan Regional Government (KRG).

Deal in place

After many years of feuding, both the Iraqi Kurds and the central government have struck a deal in which Kurds will to give half of their overall oil shipments to the federal government, in exchange for Baghdad paying overdue civil servants’ salaries.

At the moment, Kurds are currently pumping 300,000 barrels per day through Turkey via the Kurdish Regional Government-built pipeline, but around 150,000 bpd will now be given over, according to Turkish Energy Minister Taner Yildiz.

Speaking at the Building a Euro-Mediterranean Energy Bridge conference in Rome, he noted that transportation of the oil will begin "any day".

This was corroborated by Iraqi Oil Minister Adel Abdel Mahdi, who said the shipment has "already started" as a goodwill gesture.

Settling issues

A key issue for Baghdad had been opposing the Kurdish plans to export oil via an independent pipeline, which would link up with an Iraqi pipeline at the Turkish border and terminate at the Mediterranean port of Ceyhan, but Mr Yildiz said tensions have been eased.

"Income from oil contributes toward the stability of Iraq, and we [Turkey] argued from the beginning that it belongs to all of Iraq, both north and south. Turkey has done its share of work to form and protect such a system," he added.

From Turkey's perspective, the estimated 20 billion cubic metres of Kurdish gas that will be carried to the Turkish market by 2025 will make up around 30 per cent of the country’s gas consumption at that point.

Not only does this make the Kurdish Regional Government's gas market one of the most attractive sectors for Turkish companies, it will also boost Turkey's efforts to become a regional energy hub - something it is targeting over the next decade by placing a governmental focus on oil and gas, and taking advantage of its favorable location between Europe and the South Caucasus region as a key transportation hub.

On a separate note, discussions are set to take place between Greece and Turkey over the energy resources around Cyprus, which belong to both Greek and Turkish Cypriot authorities.

According to Mr Yildiz, a combination of cooperation and political structure in the eastern Mediterranean could ensure economic feasibility, with the Turkish Foreign Ministry confirming that Prime Minister Ahmet Davutoglu will visit Athens on Dec 5th and 6th for a bilateral meeting aimed at furthering stabilising Turkey's fuel future.

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