Iraq wins landmark case against Turkey over Kurdish oil exports

Iraq has received a landmark authorized case in opposition to Turkey over Kurdish oil exports, which the federal authorities in Baghdad has lengthy thought-about unlawful.

Iraq and its neighbour Turkey have been locked in a nine-year dispute about oil exports from the semi-autonomous Kurdistan Regional Authorities (KRG), which circulate from the Kurdish area to the Turkish port of Ceyhan.

Within the case fought on the Worldwide Chamber of Commerce’s Worldwide Court docket of Arbitration, Iraq claimed that Turkey violated a 1973 pipeline transit settlement by permitting the exports with out Baghdad’s consent.

The Paris-based courtroom determined in Iraq’s favour on Thursday, in response to a press release on Saturday from Iraq’s oil ministry. Turkey was ordered to pay round $1.5bn, in response to an individual accustomed to the case who requested to remark anonymously as they weren’t authorised to talk.

It’s far decrease than the sum Baghdad initially requested for, the particular person stated.

In a press release, Iraq’s oil ministry stated Baghdad, by way of its State Oil Advertising and marketing Group (SOMO), was the “solely occasion” that might handle exports by way of Ceyhan.

The ministry stated it’s going to focus on “mechanisms for exporting Iraqi oil by way of [Turkey’s] Ceyhan port with the involved authorities within the Kurdistan area in addition to with the Turkish authorities” in a fashion that ensures exports will probably be sustained and worldwide commitments met.

The federal government of Iraq and Turkey’s power ministry didn’t instantly reply to requests for remark.

“Our current understandings with Baghdad have laid the groundwork for us to beat the arbitration ruling,” KRG prime minister Masrour Barzani tweeted, including {that a} delegation will probably be in Baghdad for talks on Sunday.

Iraq is Opec’s second-largest producer, exporting about 3.3mn barrels per day. Of these, Baghdad sends 75,000 b/d to Ceyhan from Kirkuk. The KRG doesn’t publish its manufacturing determine however trade specialists estimate it at about 440,000 b/d, most of which it exports.

Iraq as an entire accounted for 27 per cent of Turkey’s imports of oil and different petroleum merchandise in December 2022, behind solely Russia, in response to the newest information from the Turkish Vitality Market Regulatory Authority. 

Enver Erkan, chief economist at Istanbul-based monetary providers group Dinamik Yatırım Menkul Değerler, stated the ICC resolution would make Turkey “extra depending on Russia” and add to the nation’s power import invoice. 

Oil exports have been an financial lifeline for Iraq’s Kurdistan area. For years, the KRG exploited ambiguity in Iraq’s structure to export crude and hold the revenues as a manner of sustaining some monetary independence from Baghdad. 

Tensions between the federal authorities and the KRG flared final 12 months as Baghdad sought to cease the KRG’s exports. It adopted a landmark Iraq federal supreme courtroom ruling in 2022, which declared the Iraqi Kurdistan power trade unconstitutional.

These tensions preceded the premiership of Iraq prime minister Mohammad Shia al-Sudani, who has labored to quell them.