Talks to restart Kurdish oil exports through the Iraq-Turkey pipeline have hit a snag as a lack of clarity over payments and contracts persists, two sources with direct knowledge of the matter told Reuters, speaking on condition of anonymity.
The negotiations, which started in late February, have so far failed to end a nearly two-year stand-off that has halted flows from Iraqi Kurdistan in the north of the country to Turkey’s Mediterranean port of Ceyhan.
Washington has been pressuring Iraq to resume shipments, with Reuters reporting last month that U.S. President Donald Trump’s administration had asked Iraq to allow the flows to restart or face sanctions.
The Ministry of Oil did not immediately respond to Reuters’ requests for comment on the talks.
The two sources said the oil ministry had sent a letter to the Kurdish authorities on Thursday asking for an independent consultant to be appointed to assess the cost of production and transportation from each field to determine prices.
Given that Baghdad is still in negotiations with international oil companies about the scope of work the consultant will undertake, the sources said that had shed doubt on Baghdad’s commitment to honor the companies’ existing contracts with the Kurdistan region.
“There is no agreed methodology for this yet and so the fear is at some point companies wouldn’t know how much they would be paid for their production as that consultant could change the whole expectation of payment,” one of the sources said.
APIKUR, a grouping of eight oil firms operating in Iraqi Kurdistan, said in a statement shared with Reuters it would not resume exports until Baghdad gave a firm commitment to honour existing contracts and provide surety of payment for past and future exports.
In an apparent reference to the letter, the APIKUR statement said the oil ministry had demonstrated it was “unwilling to negotiate a solution that honors IOC contract sanctity”, and was attempting to establish a separate process unilaterally.
“These actions by the Ministry of Oil are not acceptable,” the statement said.
Oil producers working in Kurdistan include DNO, Genel Energy, Gulf Keystone Petroleum and Shamaran Petroleum.
Washington wants the flows via Turkey restarted partly to boost global supply and therefore help lower prices. At the same time the U.S. administration wants to halt financial ties between Iraq and neighbouring Iran as it applies pressure on Tehran over its oil exports and nuclear program.
Iraq is an important ally to the U.S. and Iran, and vital to helping the latter support its economy amid international sanctions.
Baghdad is wary of getting caught in the crosshairs of the U.S. president’s policy of squeezing Tehran, sources have told Reuters.
(Reporting by Maha El Dahan; Editing by Gareth Jones and Jan Harvey)