Opportunity Crudes

Independence vote to impact Kurdish crude exports.


On Sept. 25 the citizens of Iraqi Kurdistan voted overwhelmingly (92.73%) to declare independence from Iraq, a move that could drastically impact oil exports from the semi-autonomous region. Neighboring countries in the area—in some cases concerned about separatist movements within their own Kurdish minorities—said they would not recognize the vote, and any move to try to break Kurdistan free from Iraq would result in crude exports being halted. Kurdistan holds 45MM bbl of crude reserves, and according to consultancy Rystad Energy produced 544.6K b/d of crude last year. Rystad estimated that Kurdistan will increase that figure to 602.0K b/d this year.

On Sept. 27 the Iraqi government filed suit against the Kurdistan Regional Government (KRG) to block its crude exports. In the suit the Iraqi government says only the federal government has the right to export crude, while the KRG claims Kurdistan is decentralized and has authority over its crude exports. In July the Iraqi government had filed suit against the KRG in a US District Court in Texas to block the unloading of a 1MM-bbl crude cargo the KRG had exported to the US. That cargo was eventually re-routed to Israel, with which Iraq has no diplomatic relations. Kurdistan accounted for approximately 12% of total Iraqi crude production last year.

On Sept. 28 Iraqi Prime Minister Haider al-Abadi said he had a phone call with Turkish Prime Minister Binali Yildirim, and the Turkish Prime Minister told Mr. al-Abadi that Turkey would only deal with the central Iraqi government in regards to crude exports. Kurdistan can export as much as 700K b/d of crude via the Turkish port of Ceyhan on the Mediterranean Sea. Last year Kurdish crude exports via Ceyhan averaged 515.0K b/d, and this figure has increased to 583.6K b/d this year according to cargo tracking compiled by Bloomberg News. As of Sept. 27 crude oil flows via the pipeline that connects Kurdistan and Ceyhan were still said to be flowing normally.

In addition to restrictions on its crude exports Iran has also halted refined product shipments to Kurdistan as a result of the independence vote. The semi-official Tasnim news agency said on Sept. 29, "A directive by the Road and Transportation Organization has temporarily banned carrying oil products from Iran to Iraq's Kurdistan region and vice versa following the latest developments in that region." (Sept 21, 25, 27, 28, 29)

Source: Worldwide Refining Business Digest Weekly.e, October 2, 2017.


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