Iraq to Ask Turkey to Restart Northern Oil Exports After Initial KRG Deal

(Reuters) — Iraq's federal government and the Kurdistan Regional Government (KRG) have reached an initial agreement to restart northern oil exports this week, a KRG spokesman said on Sunday, and Baghdad will write to Turkey to request a resumption in pipeline flows.

Turkey stopped pumping about 450,000 b/d of Iraqi crude from a pipeline from the Fish-Khabur border area to its Ceyhan port on March 25 after Iraq won an arbitration case. Baghdad had argued that Turkey had violated a joint agreement by allowing the KRG to export oil to Ceyhan without its consent.

"Following several meetings between the KRG and federal government, an initial agreement has been reached to resume oil exports through Ceyhan this week," Lawk Ghafuri, head of foreign media affairs for the KRG wrote in a Twitter post.

"This agreement will remain in effect until the oil and gas law bill is approved by Iraqi Parliament," Ghafuri said.

Iraq's oil ministry in Baghdad said on Sunday it hopes to reach a final agreement soon with the KRG on resuming northern oil exports.

Background: Explainer: What Is the Iraq-Turkey Oil Pipeline Dispute and Who's on the Hook?

The halted flows only account for about 0.5% of global oil supply, but the stoppage, which forced oil firms operating in the region to halt output or move production into rapidly-filling storage tanks, still helped boost oil prices LCOc1 last week back to near $80/bbl.

Iraq's oil ministry said that details on the new export agreement would be announced "in due course".

Sources told Reuters on Saturday the agreement states that Iraq's northern oil exports will be jointly exported by Iraq's state-owned marketing company SOMO and the KRG's ministry of natural resources (MNR).

The resumption of pipeline flows from Iraq's semi-autonomous Kurdistan region will still need approval from Turkey.

"A letter of request to resume oil flows will be sent by Baghdad to Ankara," a KRG official told Reuters on Sunday.

Sources last week told Reuters that Turkey wants an unfinished court case settled with Iraq before the pipeline reopens.

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