ISTANBUL (Reuters) - Kurdistan's oil exports to world markets are set to be suspended for a second week running, a shipping source said, a move that will deprive Iraq's semi-autonomous region of its main revenue stream as the security situation in southeast Turkey worsens.
The pipeline to the Turkish port of Ceyhan from fields in Iraq's north, which carries around 600,000 barrels per day of crude, has been halted since Feb. 17 and was unlikely to resume pumping until Feb. 29, the source said.
The outage would be one of the longest in the past two years and a major blow to Kurdistan, which depends on revenue from oil exports via the pipeline and is struggling to avert economic collapse brought on by a global slump in energy prices.
The interruption is also bad news for European refiners which have been snapping up relatively cheap Kurdish barrels over the past year, boosting profits and already being spoilt for choice in an oversupplied market.
"We were told that the pipeline would not be on line until at least Monday," the source told Reuters on condition of anonymity because the information has not been made public.
Turkish officials were not available for immediate comment.
Industry sources have said the pipeline was sabotaged. The shipping source and a second industry source with knowledge of the matter told Reuters that crude flows had been turned off due to ongoing security operations in Sirnak province, neighboring Syria and in Iraq.
Violence has surged across Turkey's predominantly Kurdish southeast following the breakdown of a two-year ceasefire between Turkish security forces and the PKK last July.
The PKK, which says it is fighting for autonomy for Turkey's large ethnic Kurdish minority, has sealed off entire districts of some towns and cities in the southeast and declared autonomy, prompting the security forces to step up their operations.
Considered a terrorist group by Turkey, the United States and the European Union, the PKK launched a separatist armed rebellion against the Turkish state more than three decades ago and more than 40,000 people have been killed in the conflict.
"The security situation is both very chaotic and hard to monitor due to the tandem operation of several PKK-inspired, or directly PKK-linked sub-groups," said Akin Unver, assistant professor of international relations at Kadir Has university.
The pipeline has been sabotaged several times inside Turkey in attempted thefts and the KRG has also accused the PKK of targeting it. Although both Kurdish, the PKK opposes the KRG's economic relations with its foe, Turkey.
"Security forces have been carrying out mine sweeping around Idil," a second industry source said, referring to a district in Sirnak, which has become a focus of Ankara's military campaign.
A 24-hour curfew has put in place in Idil last week and 10 PKK militants were killed there on Monday.
"Pipeline passes through several well dug-in PKK cells and rural strongholds," Unver said. "Even though Turkish military outposts and patrols protect key sections of the pipeline, it is hard to prevent sabotage when the overall security situation turns more conflictual."
As a result of the outage, Iraq's state-run North Oil Company (NOC) which operates the Kirkuk fields has been forced to cut production to around 120,000 bpd from 200,000 bpd, a company official told Reuters on Saturday.
It is currently pumping around 30,000 bpd to the small refinery in Kirkuk and diverting around 70,000 bpd to storage depots near the city.
Reporting by Humeyra Pamuk; additional reporting by Isabel Coles and Dmitry Zhdannikov; editing by Jason Neely and David Evans