Exclusive: Iraq plans to sell oil through Iran if talks with Kurds fail

Sun Aug 28, 2016 9:15am EDT
 
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By Stephen Kalin

BAGHDAD (Reuters) - Iraq's government would consider selling crude through Iran should talks with the autonomous Kurdish region on an oil revenue-sharing agreement fail, a senior oil ministry official in Baghdad told Reuters.

Iraq's State Oil Marketing Organisation (SOMO) plans to hold talks with the Kurdish Regional Government (KRG), possibly next week, about Iraqi oil exported through Turkey, Deputy Oil Minister Fayadh al-Nema said in an interview on Friday evening.

"If the negotiations come to a close" without an agreement "we will start to find a way in order to sell our oil because we need money, either to Iran or other countries", he said by telephone.

Iraq, OPEC's second-largest producer after Saudi Arabia, depends on oil sales for 95 percent of its public income. Its economy is reeling under the double impact of low oil prices and the war against Islamic State militants.

The Kurdistan region produces around 500,000 barrels per day (bpd) on its territory and exports those volumes via Turkey. Baghdad would not be able to reroute those volumes to Iran but could order shipments of some 150,000 bpd via Iran that are being produced in the nearby province of Kirkuk. 

An agreement between Iran and Iraq could function in a similar fashion as oil-swap deals Tehran has had with Caspian Sea nations, according to an oil official who asked not to be identified.

Iran would import Iraqi oil to its refineries and export an equivalent amount of its own crude on behalf of Baghdad from Iranian ports on the Gulf. Iraq has ports on the Gulf but they are not linked to the northern Kirkuk fields by pipeline.

Iraq's state-run North Oil Company resumed pumping crude through the Kurdish-controlled pipeline to Turkey last week as "a sign of goodwill to invite them (the Kurds) to start negotiations," Nema said.   Continued...

 
Boys sit on the Iraqi-Turkish pipeline in Zakho district of the Dohuk Governorate of the Iraqi Kurdistan province, Iraq, August 28, 2016.  REUTERS/Ari Jalal