ERBIL (Kurdistan 24) – The federal government of Iraq will stop trucking crude oil from Kirkuk Province to Iran in November to comply with US sanctions imposed on Tehran, five Iraqi sources familiar with the export process said on Friday.
The disputed province of Kirkuk has some of the oldest and largest oilfields in the Middle East. In late 2017, Iraq started to export the crude oil from Kirkuk to Iran for use in its refineries, for which Iran agreed to deliver comparable amounts of oil into Iraq’s southern ports.
Now, Baghdad is sending less than 30,000 oil barrels per day (bpd) to Iran.
“Kirkuk oil trucking to Iran will be halted in November in line with the American sanctions against Iran. [Iraq's state oil marketer] SOMO plans to sell 30,000 bpd from a small oilfield near Mosul as of November as an alternative. SOMO issued the tender on Thursday,” a source from the Iraqi Oil Ministry told Reuters.
US sanctions on Iran have put the new prime minister of Iraq, Adel Abdul-Mahdi, in a difficult position as his country’s economy is closely intertwined with its eastern neighbor.
The Iraqi premier had said the day before that Baghdad would prioritize its interests and independence when it comes to the sanctions, but the administration in Washington has repeatedly stressed that there will be severe consequences for any country that fails to respect the embargoes.
“The U.S. has been putting pressure on Iraq to suspend shipments of oil to Iran and to resume Kurdish oil flows towards Turkey. If Turkey gets more oil from Iraq, it will be more difficult for Ankara to argue it needs a U.S. waiver to continue buying Iranian oil,” a source familiar with Iraqi oil export operations told Reuters.
Former Prime Minister of Iraq Haider al-Abadi in mid-October agreed with the Kurdistan Regional Government (KRG) on a plan to resume exporting oil to Turkey’s Ceyhan port through the Kurdish pipeline, but it has yet to be implemented.
The agreement is subject to final approval by Abdul-Mahdi and current Oil Minister Thamer Ghadhban, the sources added.
“Kurdish authorities reached a deal with Abadi’s government to resume Kirkuk exports and it was decided that the final say should be left to the new government and oil minister to sign a final deal,” one of the sources said.
Erbil and Baghdad had reached a deal, but Abdul-Mahdi’s signature is necessary before it comes to fruition, two oil officials from the state-owned North Oil Company (NOC) told Reuters.
On Thursday, SOMO announced a tender to sell small qualities of crude oil from the northern Qayyara oilfield for export by tankers. SOMO has already invited companies to submit bids by Nov. 4 when the new US sanctions against Iran are scheduled to come into effect.
Crude from Kirkuk has been exported to Turkey since 2014 after Kurdish forces retained control of the disputed province and protected it from the attacks of the Islamic State (IS). The export of 300,000 bpd oil to Turkey was halted last year following the attack and military takeover of Kirkuk by Iraqi forces and Shia militias.
Editing by John J. Catherine