Crude exports were flowing normally from fields in Iraq’s oil-rich Kirkuk province as government troops clashed with Kurdish forces on the first day of an Iraqi military thrust to regain control in the disputed area.
Oil fields in Kirkuk, together with deposits in the Kurdish region of northern Iraq, were exporting about 600,000 bpd through a Kurd-controlled pipeline to Turkey, a person familiar with the matter said yesterday, asking not to be identified because the information is private. Iraqi forces advancing in the province said they’ve captured a refinery, a gas plant and other facilities, state-run Iraqiya television reported.
“The most likely scenario is that some exports will continue, with repeated low-intensity disruptions to the pipeline,” said Jaafar Altaie, managing director of Abu Dhabi-based consultant Manaar Group.
Kirkuk, home to Iraq’s oldest-producing oil fields, has emerged as a tinderbox in the power struggle between the central government in Baghdad and the Kurdistan Regional Government. Tensions in the province have flared into open conflict between the central government and the semi-autonomous KRG following a Kurdish referendum on independence from Iraq on September 25. The KRG included Kirkuk on the vote, despite competing claims to the area.
While oil exports continued to flow during the early stage of the military advance, a potential for disruptions sent Brent crude as much as 1.9% higher in London trading. The benchmark grade was 97 cents higher at $58.14 a barrel at 12.54pm London time, after gaining 2.8% last week.
Iraq, the second-largest producer in Opec, pumps most of its 4.47mn bpd from fields in the south and ships it from the Gulf port of Basra. But with Iraq supplying about 14% of total production from the Organization of Petroleum Exporting Countries, a deepening conflict in the country’s north could roil crude markets.
The Kurds are pumping about 120,000 bpd in Kirkuk, while the central government produces about 60,000 barrels at wells they control in the area, said Manaar’s Altaie. The adjacent Kurdish region was pumping some 350,000 bpd, mainly at its Taq Taq and Tawke fields, and exports from Kirkuk and Kurdish deposits together totalled some 450,000 bpd, he said. Altaie said he expects some amount of Kirkuk’s output to be shut off and on sporadically as Iraqi troops take control of infrastructure in the territory.
Baghdad piggybacks its exports from Kirkuk with Kurdish shipments through the KRG-run pipeline to Turkey, where they flow together to the Mediterranean port of Ceyhan. The Kurds have been pumping crude at the Avana and Khurmala sections of the giant Kirkuk oil field, as well as at the smaller Bai Hassan deposit. Iraq’s state-run North Oil Co produces at the Baba section of the Kirkuk field and at the separate deposits of Khabbaz and Jambur.
Iraqi forces walk in front of an oil production plant as they head towards Kirkuk during an operation against Kurdish fighters yesterday. Oil fields in Kirkuk, together with deposits in the Kurdish region of northern Iraq, were exporting about 600,000 bpd through a Kurd-controlled pipeline to Turkey, a person familiar with the matter said yesterday.
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