Kurdish oil exports to increase to 300,000-400,000 bpd in 2015
Oil exports from northern Iraq are expected to be between 300,000 and 400,000 barrels per day in 2015, the International Energy Agency said, including crude produced in the Kurdistan Region.
The estimate from the West's energy watchdog, citing regional and Western industry sources, follows a temporary agreement between Baghdad and the Kurdistan Regional Government (KRG) this month over their long-running oil sales dispute.
The IEA said the sources believe the capacity of the KRG's independent pipeline has been expanded, potentially adding more crude to the global oil market that has already fallen 45 per cent since June due to excess supplies.
“Regional and Western industry sources reckon that exports from northern Iraq – including volumes from the KRG and Kirkuk – could rise to an average of 300,000 bpd to 400,000 in 2015 if the 2 December Baghdad/KRG agreement is upheld,” the Paris-based IEA said in its monthly market report.
“The KRG pipeline has been re-purposed and can handle up to 550,000 bpd, they say.”
The IEA lowered its forecast for oil demand growth and said prices are likely to come under more pressure. Brent fell to a five-year low of $62.75 a barrel after the report.
After years of bitter feud, Erbil will provide 250,000 bpd of Kurdish-produced crude to the central government's state marketer Somo under this month's agreement, and allow 300,000 bpd from the northern Kirkuk fields to flow in the Kurds’ pipeline to the Turkish Mediterranean port of Ceyhan.
Baghdad's own pipeline to Ceyhan has been offline since early 2014 after being attacked by militants, largely cutting off Kirkuk supplies. The line runs through territory now controlled by Islamic State.
KRG forces took control of Kirkuk and the nearby field of Bai Hassan in June after the Iraqi army melted away in the face of Islamic State's advance. The KRG had previously controlled only one of the Kirkuk field's three formations, Kharmala, with Baghdad's North Oil Co running the Avana and Baba domes.
"In November, flows of 120,000 bpd from Avana and Bai Hassan allowed the KRG to boost pipeline flows towards 300,000 bpd,” the IEA said.
"By early December, the KRG exported up to 350,000 bpd to the Turkish Mediterranean, according to regional sources,” the IEA added, but said it was unclear how much of this crude was being stored rather than sold.
Under the export deal, Baghdad will restore the KRG's 17 per cent cut of the federal budget and provide funding for the Kurdish Peshmerga forces. The KRG has long said the Iraqi constitution allows it to export oil independently of Baghdad which had decried such sales as illegal smuggling.