Iraq’s oil ministry said the Kurdistan Regional Government had refused to let it use a pipeline as an alternative route for crude flows disrupted by the Iran conflict, accusing authorities there of putting up irrelevant conditions.
A senior Kurdish government official told Reuters authorities there would be happy for the Iraqi government to use the pipeline, but said Baghdad first needed to lift what he called a “dollar embargo” on the region.
“We want a deal. We want to help Iraq and bring relief to the markets, but this embargo must end first,” the official said.
Oil production from Iraq’s main southern oilfields, where most of its crude is produced and exported, has plunged 70% to just 1.3 million bpd, sources told Reuters on March 8, as the Iran conflict effectively shut off the vital Strait of Hormuz.
Iraq’s oil ministry sent a letter in early March to the Kurdistan Regional Government seeking permission to pump at least 100,000 barrels per day of crude from Kirkuk oilfields through the Kurdistan pipeline network to Turkey’s Ceyhan energy hub, two oil officials told Reuters last week.
The Kurdish official said they had been pressing for an end to what he said was a bar on the region’s banks accessing dollars for goods imported through its borders and airports.
Kurdish officials say tensions with Baghdad have risen after the federal government moved to implement a new electronic customs system, allowing it to monitor imports and revenues, a step the KRG sees as undermining its autonomy and control over trade.
Iraq’s oil ministry said the Kurdistan Regional Government’s Ministry of Natural Resources had “set a number of conditions unrelated to the issue of crude oil exports.”