Eurasia Press & News
Despite Turkiye’s professed support for Iraq’s sovereignty, its actions, including nine years of illegal oil imports from Kurdistan, reveal quite the opposite, with the repercussions now affecting global oil supply.
In a joint press conference held in 2019 at Turkiye’s Presidential Complex in Ankara, President Recep Tayyip Erdogan and his Iraqi counterpart at the time, Barham Salih, expressed their shared hope for cooperation between both countries across various fields.
Iraq’s Popular Mobilization Units (PMU) had achieved a hard-fought victory against the self-proclaimed caliphate of ISIS two years prior, with significant support from neighboring Iran. Additionally, the PMU actively participated in the final territorial defeat of the terrorist organization in Syria in 2019.
However, the liberated areas in Iraq were in desperate need of reconstruction. Addressing Ankara’s policy on Iraq during the press conference, Erdogan took the opportunity to clarify that:
“Our policy toward Iraq is based on preserving Iraq’s political unity and territorial integrity as well as ensuring its stability and security. Turkiye is ready to make any kind of contribution to the efforts for Iraq’s stability and reconstruction.”
Rebuilding Iraq after ISIS
Baghdad had estimated that it needed around $100 billion for the country’s post-ISIS reconstruction. During the International Conference for the Reconstruction of Iraq organized in Kuwait in 2018, Turkiye made the highest credit pledge for Iraq’s reconstruction.
Such reconstruction work is ongoing – only last week, it was reported that a project undertaken by two Turkish companies to rebuild Mosul International Airport will be expected to be completed by the end of 2024 and open again to civilian flights.
It is important to note that ISIS is not the sole designated terrorist group that has undermined Iraq’s security and stability. There exists a persistent threat posed by the Kurdistan Workers’ Party (PKK), to which Turkiye is an especially committed and bitter adversary.
During a 2020 press conference between Erdogan and then-Iraqi Prime Minister Mustafa al-Kadhimi, the Turkish president again emphasized his country’s support for Iraq’s reconstruction and territorial integrity, and also that they “support the Iraqis and their operations against terrorists PKK, within the framework of the right of self-defense.”
Despite these positive statements, there are actions that raise concerns. Currently, Turkiye stands in the way of significant financial resources that could benefit the Iraqi state treasury. Estimates suggest that Turkiye’s actions prevent hundreds of millions, or even billions, of dollars, from entering Iraq’s treasury each month.
One significant development related to this issue is the lawsuit that Baghdad won in March. According to the ruling, Ankara is obligated to pay compensation for importing oil from the semi-autonomous Kurdistan region without the consent of the federal government of Iraq.
The Iraq-Turkiye pipeline
The Kirkuk-Ceyhan pipeline, inaugurated in 1977, was the first pipeline connecting the Iraqi city of Kirkuk to the port of Ceyhan in Turkiye. In 1987, a second pipeline was opened, establishing a 970-kilometer route that connected Iraq’s oil fields to Turkiye. This pipeline is the largest in Iraq, with a design capacity ranging from 500,000 to 1,100,000 barrels per day (bpd).
The Iraq-Turkiye pipeline has faced numerous disruptions due to sabotage attacks by the PKK. Previously, the pipeline has been vulnerable to attacks by ISIS, particularly in 2014, which resulted in reducing its carrying capacity.
Turkiye and Iraq signed an agreement in 1973 to transport Iraqi oil, with subsequent updates in 1976, 1985, and 2010. According to this agreement, the Turkish government “must comply with the instructions of the Iraqi side regarding the movement of Iraqi crude oil in all storage and discharge centers until it reaches the final terminal.”
Under this agreement, Turkiye imported approximately 450,000 bpd from Iraq, accounting for 0.5 percent of the global oil supply and 12.58 percent of Iraq’s total oil exports.
Illegal oil imports from Kurdistan
Tensions between the Kurdistan Regional Government (KRG) and the Iraqi central government over oil exports escalated significantly around 2007. The disagreement stemmed from disputes over the distribution of oil wealth, exacerbated by the KRG signing contracts with international oil companies without Baghdad’s approval.
Turkiye began seeking benefits from the oil reserves in Iraqi Kurdistan in early 2014. This move allowed the region to independently export oil and connect Kurdish pipelines to the Iraq-Turkiye pipeline at the border town of Fesh Khabur, controlled by the KRG.
However, this action violated the agreement between the Turkish and Iraqi governments, rendering the oil import process illegal. Turkiye’s approval of importing Kurdish oil enabled the KRG to sell Iraq’s oil directly and retain the revenues.
As a result of the growing dispute, Iraq’s Oil Marketing Company filed a lawsuit in May 2014, subject to arbitration by the ICC International Court of Arbitration on behalf of the Ministry of Oil.
The lawsuit targeted the Turkish government, represented by the state-owned pipeline operator Botaş. The lawsuit alleged that:
“By transporting and storing crude oil from Kurdistan, and by loading that crude oil onto the tanker in Ceyhan, all without the authorization of the Iraqi Ministry of Oil, Turkiye, and BOTAS violated their obligations under the Iraq-Turkiye Pipeline Agreement.”
The arbitration court took nine years to reach a ruling, with several suspensions of the lawsuit by the Iraqi government before its reactivation. During this period, Turkiye continued to benefit from Iraqi oil while maintaining a discourse of partnership with Baghdad on one hand, and attacking Iraqi Kurdistan on the other.
In 2017, following the Iraqi Kurdistan independence referendum, President Erdogan declared, “The Kurdish referendum has no legitimacy in terms of the Iraqi constitution and international laws.” Despite this, Turkiye continued importing oil from the region without regard for the sovereignty of the Iraqi state.
The economic cost of Iraq’s legal victory
Shortly after the arbitration lawsuit ruling, the Iraqi government and the KRG signed an agreement stating that the region would export 400,000 bpd through the national oil company SOMO. In turn, Iraq is liable to pay over $527 million to Turkiye in reimbursement claims related to equipment and personnel.
However, Turkiye decided to halt the importation of Iraqi oil in objection to the court’s decision, which included a $1.5 billion payment to Iraq for violating the agreement with Baghdad. This court ruling reaffirmed the national sovereignty of oil wealth and its management by the Federal Ministry of Oil, but its economic cost to Iraq has been significant.
Since the legal decision, the export of around 450,000 bpd from Kurdistan has ceased, resulting in daily financial losses exceeding $33 million and totaling more than $1 billion per month. The shutdown of the Iraq-Turkiye pipeline poses a major crisis for Iraq, whose economy heavily relies on energy exports. Additionally, the Kurdistan region has been impacted as it relied on funds from Ankara to pay the salaries of its employees.
The closure of the pipeline has also led foreign companies operating in the region, such as DNO and Genel Energy, to cancel their production forecasts for Kurdish oil, further complicating the situation.
Global impact and oil prices
The impact of the pipeline suspension extends beyond Iraq. The world is losing nearly 450,000 bpd, which has implications for global oil prices. The halt also affects US efforts to mediate between Erbil and Baghdad to ensure the flow of Iraqi oil. The US had made attempts to resolve differences between the two parties, but the pipeline suspension hampers these efforts.
Furthermore, the pipeline shutdown may prompt Ankara to search for alternative sources of oil. Currently, Turkiye imports about 24 percent of its total oil imports from Iraq. If the pipeline remains inactive, Turkiye may turn to Russia and Iran, who provide 15 percent and 12 percent of Turkish oil imports, respectively. This scenario will not align with Washington’s interests as it seeks to reduce global oil dependency on Moscow and Tehran.
The loss of oil exports from the Kurdistan region also means a significant funding reduction for Washington’s allies in the region. The KRG, for instance, had an estimated loss of over $2.2 billion during the 87-day pipeline shutdown.
Since the court ruling and the subsequent halt in Iraqi oil exports to Turkiye, there have been efforts to reactivate the Iraq-Turkiye pipeline. Iraq’s political victory in the arbitration lawsuit will come at a high cost if Turkiye does not agree to re-import oil through the pipeline.
The situation raises questions about the extent of Ankara’s genuine commitment to cooperate with Baghdad. Despite Erdogan’s public declarations of cooperation, depriving Iraq of significant monthly revenues sharply contradicts these statements. Turkiye’s illegal importation of oil from the Kurdistan region for the past nine years, in contravention of its agreements with Baghdad, is evidence aplenty that it does not respect Iraq’s sovereignty and territorial integrity.
