Iraq wins landmark case in opposition to Turkey over Kurdish oil exports

Iraq has gained 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 movement from the Kurdish area to the Turkish port of Ceyhan.

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

The Paris-based court docket determined in Iraq’s favour on Thursday, in keeping with an announcement on Saturday from Iraq’s oil ministry. Turkey was ordered to pay round $1.5bn, in keeping with 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 individual stated.

In an announcement, Iraq’s oil ministry stated Baghdad, via its State Oil Advertising Group (SOMO), was the “solely social gathering” that may handle exports via Ceyhan.

The ministry stated it’s going to focus on “mechanisms for exporting Iraqi oil via [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 likely 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 latest 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 likely 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 business consultants estimate it at about 440,000 b/d, most of which it exports.

Iraq as a complete accounted for 27 per cent of Turkey’s imports of oil and different petroleum merchandise in December 2022, behind solely Russia, in keeping with the latest information from the Turkish Power Market Regulatory Authority. 

Enver Erkan, chief economist at Istanbul-based monetary providers group Dinamik Yatırım Menkul Değerler, stated the ICC determination 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 means of sustaining some monetary independence from Baghdad. 

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

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