 The $25 Billion Cost of Iraq’s Oil Deadlock
By Julianne Geiger - Jan 23, 2025, 12:00 PM CST
The delayed approval of a $16-per-barrel production fee has prolonged the shutdown of Kurdistan’s oil pipeline to Turkey’s Ceyhan port, costing $25 billion over 22 months.
The impasse hinders Iraq’s ability to meet OPEC+ obligations while maximizing revenue, putting Baghdad in a political and economic bind.
Despite Turkey’s claim that the pipeline is operational, political negotiations and power struggles continue to delay resumption of oil exports.
Pipeline
In a twist that is perhaps surprising even for the labyrinth of Iraqi politics, the Kurdistan Regional Government (KRG) has found itself blindsided by a delayed parliamentary vote on oil production costs. Despite earlier agreements, the Iraqi parliament opted to hit the brakes on approving the $16-per-barrel production and transport fee proposed in November, throwing yet another wrench into a pipeline that’s been as dormant as the region’s export ambitions for almost two years.
KRG Prime Minister Masrour Barzani, fresh from rubbing elbows at Davos, lamented the unexpected development, saying, “I was very surprised.” One assumes his surprise was mildly tempered by the region’s long history of political chess moves masquerading as negotiations.
This delay is the latest in a costly deadlock over the key oil pipeline linking Kurdistan to Turkey’s Ceyhan port, capable of moving 500,000 barrels per day.
That’s no small amount of change.
OPEC+ May Be Facing Long-Term Production Cuts
At today’s Brent crude price of roughly $75, the shut-in barrels equate to $37.5 million in forgone revenue daily. For context, over the 22-month shutdown (approximately 660 days), that’s a jaw-dropping $25 billion loss.
With stakes as high as these, haggling over $16 per barrel seems less like fiscal prudence and more like a power struggle.
For the federal government in Baghdad, this prolonged impasse presents an additional conundrum: reconciling obligations under OPEC+ with its inability to maximize output. Restarting the pipeline would undoubtedly bolster national revenues. But it might also breach production caps under OPEC, landing Iraq between a rock and a hard place.
Turkey insists the pipeline is operational, citing earthquake repairs completed long ago, but the blame game continues. The question isn’t just when this gridlock will end, but how much revenue both governments can afford to lose before the region’s most lucrative resource flows freely again.
By Julianne Geiger for Oilprice.com |
Iraq revives oil production from 20 wells in Kirkuk: Source
Economy
Kirkuk
Nineveh
Oil Production
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Iraq revives oil production from 20 wells in Kirkuk: Source
2025-01-24 09:17
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Shafaq News/ Iraq's Jambur oil field in Kirkuk has resumed production from 20 wells, while an Angolan company signed a contract to drill 13 wells in the Qayyarah oil field of Nineveh Province, a source from the North Oil Company (NOC) reported on Friday.
The source told Shafaq News, “The NOC has launched field development projects to enhance production in its Kirkuk fields. Technical and engineering teams successfully restored 20 wells in the Jambur field that had been inactive for years, adding around 10,000 barrels per day (bpd) to output.”
“Currently, production ranges from 300,000 to 350,000 bpd, down from 500,000 to 750,000 bpd about 13 years ago.”
Notably, the Jambur oil field is located northeast of Kirkuk, parallel to the Kirkuk and Bai Hassan fields, and has been in production since August 1959.
In a related development, the source noted that “Sonangol, the Angolan operator of the Najmah and Qayyarah fields in Nineveh, has signed a contract with Iraq Drilling Company (IDC) to drill 10 development wells, along with three optional appraisal wells in the Qayyarah field.”
The Arab Well Logging and Well Services Company (AWLCO) also participated in the turnkey contract. All parties are committed to completing the project within the set timeline, which is expected to increase Qayyarah's production to 15,000 bpd.
In December 2009, Iraq’s Ministry of Oil signed two preliminary agreements with Sonangol to develop the Qayyarah and Najmah fields. The company secured the contracts by proposing fees of $6 per barrel with a production target of 110,000 bpd for Najmah, and $5 per barrel with a target of 120,000 bpd for Qayyarah. |
H7,
Agree.Baghdad don't deserve large foreign investment and the world is looking in and thinking NO THANKS.September will come and going forward I think Kurdistan need to separate themselves from the cretins down south altogether imo. |
To hell with it and these clowns. September isnt that far away.
GLA |
The best delivery of that line ever 😆
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Sarah on overtime today. I am surprised as Friday night is usually busy for taxis. |
He may not see it as a spanner of course and may have a cunning plan probably drempt up after watching Traitors. |
#gkp #gkptakeoverCEO âStay Bonusâ?A contractual obligation required by the buyers to be in place as part of their post acquisition business integration plan.He is KEY MAN,50% paid in shares = huge incentive as Takeover premium enormous.He gets paid it within daysâ¦?? |
The overall picture is that just as things look like being sorted someone throws a spanner in the works. This time Sudani himselfThat pretty much sums up how things are out there. |
Well done GKP.
Given the many uncertainties in the current political scene I did expect the share to collapse further today. It seems that holders are waiting for the road to clear over the next two weeks or so. There is a real battle going on and it`s not about money.
I just think that the new PKK / KRG Alliance could make it happen this time round. |
#gkp #gkptakeoverCEO âStay Bonusâ?A contractual obligation required by the buyers to be in place as part of their post acquisition business integration plan.He is KEY MAN,50% paid in shares = huge incentive as Takeover premium enormous.He gets paid it within daysâ¦?? |
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