Turkey the loser as Baghdad rewards Iran with control of Kurdish oil exports

By bne IntelliNews November 15, 2017

Iran is taking control of oil exports from Iraqi Kurdistan's giant Kirkuk field with Baghdad authorising the move as a reward for the Iranians' help in quelling the Kurds' late September push for independence from Iraq, Reuters reported officials and trading sources as saying on November 14.

The spoils obtained by Iran will reportedly come as a blow to Turkey as, to secure their oil gain, the Iranians have arranged with Baghdad to revive a project to construct an oil pipeline running from the Kirkuk field to central Iran and onwards to export terminals on the Persian Gulf. Both Riyadh and Washington will also be none too pleased by Iran's oil win as they have lately been trying to drive a wedge between Tehran and Baghdad, but Iraq's Shia government seems determined to work closely with Shia Iran partly thanks to Tehran's role in not only dislodging the Kurds but expelling Islamic State from its last strategic holdouts in Iraq.

Crude oil exports from Kirkuk have to date been sent via Turkey to the Mediterranean, with the Turks promoting the supply route as one component of their plan to become an extensive energy hub for Europe.

On October 20, Baghdad insisted that a $400mn deal with the government of Iraqi Kurdistan for the acquisition of an 80% share in the region's six oil deposits with an estimated reserves of 670mn barrels, which was announced by Russian state-run oil major Rosneft, was illegal as it did not have a central government stamp of approval.

Reuters reported sources as saying that the first Kirkuk oil will be trucked across the border in coming days for delivery to a refinery in Kermanshah, western Iran. Iran, the news service said, would receive 15,000 barrels per day worth nearly $1mn, with the volume to gradually rise fourfold.

Hamid Hosseini, the Iranian secretary-general of the Iran-Iraq Chamber of Commerce, has told media that the Islamic Republic intends to build a pipeline with a capacity of 650,000 bpd, with the oil to flow to both Iranian refineries and to export facilities.

The Kurds voted overwhelmingly for independence in a referendum that upset Iran and Turkey, neighbours of Iraq that both have large Kurdish populations that could be motivated to demand autonomy or independence by the vote. After the Kurds refused to annul the referendum, as demanded by Baghdad, the Iranians assisted in capturing Kirkuk with the use of their Quds force, the international branch of the Islamic Revolutionary Guards Corp (IRGC).

The IRGC, which essentially controls a huge part of the Iranian economy, is expected by analysts to indirectly own and run the businesses that will export and capitalise on Kirkuk oil.

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