Turkey allows Iraqi oil export restart

Oil is Baghdad's only source of hard currency


Turkey allowed Iraq to restart around a fifth of its oil exports on Tuesday after halting the flow for a day pending the payment of a $100 million debt.
Iraq pumps around 430,000 barrels per day (bpd) of its nearly 2 million bpd of oil exports through its northern pipeline to Turkey's Mediterranean port of Ceyhan.

Turkish state pipeline operator Botas ordered the restart to loadings from Ceyhan on Tuesday after Iraq paid half the debt, a senior Botas source said.

"Iraq has an outstanding debt to Turkey long overdue," the Botas source said. "Yesterday Botas notified Iraq officially that if the debt is not repaid all loadings will be stopped, and Botas stopped loadings yesterday. After this payment, Botas ordered loadings to start again."

An Iraqi oil official said earlier the flow stopped due to a court order from a small Turkish court pending the settlement of a claim. The Botas official was unaware of any court order, but said that some Turkish companies had filed cases against Iraq in Turkish courts to recover debts.

Deal details

Baghdad relies on oil revenues as its only source of hard currency. The value of one day's oil exports through the pipeline is about $52 million.

"It is ridiculous to stop an operation worth billions of dollars for a few million dollars," the Iraqi oil official said.

The first vessel was berthing at Ceyhan to start loading Iraqi oil as operations restarted, a shipping agent said.

The vessel will load crude for delivery to Spanish refiner Repsol, he added. A second vessel was waiting for its cargo.

Exports through the pipeline had halted around midday on Monday. Around 1.3 million barrels of Kirkuk crude from Iraq's northern oilfields was in storage at Ceyhan, shippers said.

Oil & security

Tighter security has allowed Baghdad to boost exports through the pipeline since last summer. The route was plagued by sabotage and technical problems for four years following the U.S.-led invasion of March 2003.

But the flow through the pipeline have been interrupted several times in the past three weeks due to glitches, according to shippers.

An Iraqi oil official said last week that the flow through the line had fallen since June after Iraq's largest refinery at Baiji restarted following maintenance.

In the south, cargoes loading at Iraq's main Basra oil terminal were suffering delays of 4-5 days due to shipping congestion, the Iraqi oil ministry source said.

Iraq exports over 1.5 million bpd from Basra.