Negotiations to restart Iraqi oil exports to Turkey have once again reached a deadlock, marking the second failed attempt in a week, despite Washington urging Iraq to resume shipments, Reuters reported.
Exports to Turkey’s Ceyhan port were halted two and a half years ago when Ankara suspended Iraq’s 450,000 barrels per day (bpd) of crude shipments through the Iraq-Turkey pipeline. The decision followed an International Chamber of Commerce (ICC) ruling that required Turkey to pay Baghdad $1.5 billion in damages for unauthorized oil exports by the Kurdistan Regional Government (KRG). The prolonged stoppage has reportedly cost the KRG billions of dollars in revenue.
Iraq, the second-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC) after Saudi Arabia, relies heavily on crude oil exports. Oil revenue accounts for over 90% of the country’s total income.
Major Energy Investments Move Forward
Despite the ongoing export impasse, Iraq’s energy sector has seen some positive developments. Last year, British energy giant BP Plc (NYSE:BP) agreed to develop Iraq’s Kirkuk oil and gas fields under a profit-sharing agreement, according to the Iraqi oil ministry. Currently, the Kirkuk fields produce around 245,000 barrels of crude oil per day.
In another significant deal, French multinational TotalEnergies (NYSE:TTE) has reached an agreement with the Iraqi government to launch a long-delayed $27 billion energy project. Originally signed in 2021, the deal includes the development of four oil, gas, and renewable energy projects in southern Iraq over 25 years, with an initial investment of $10 billion. However, political disputes delayed progress. Iraq has now agreed to a reduced 30% stake in the project, paving the way for foreign investment to return.
Following years of turmoil, Iraq has recently experienced a period of relative stability, improving the prospects for international investors. TotalEnergies CEO Patrick Pouyanne confirmed the agreement, stating, “The government of Iraq confirmed the whole contract, no modification at all … so that was for me more than good news,” in remarks to Reuters.
The agreement signals potential growth in Iraq’s energy sector, even as oil export negotiations with Turkey remain unresolved.
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