Turkey ordered to pay $1.4bn to Iraq in Kurdistan oil arbitration case


An international arbitration court has ruled against Turkey in a long-running dispute with the Iraqi government over crude oil exports from the autonomous Kurdistan region, two Turkish sources familiar with the matter, but not authorized to speak to the press, said Middle East Eye .

Iraq’s oil ministry in a separate statement on Saturday welcomed the favorable ruling from the International Court of Arbitration issued on Thursday, saying the judgment confirmed that Iraq’s national oil company SOMO is the only entity authorized to carry out oil export operations managed through the Turkish Port of Ceyhan.

The ministry said it would discuss mechanisms to export Iraqi oil through the port of Ceyhan, with the Turkish government and the Kurdistan Regional Government (KRG) in Iraq, in a way that would guarantee the continuation of shipments.

Iraq sued Turkey almost nine years ago over an oil agreement between Ankara and Erbil regarding exports through the Kirkuk-Ceyhan pipeline. Iraq has claimed for years that Iraq’s Kurdistan region has no authority to carry out energy exports without Baghdad’s consent.

One source familiar with the MEE law said the Iraqi authorities had demanded $33bn from Turkey for the damage, but were unable to get that amount. The source added that Turkey was ordered to pay $1.4bn to Iraq to cover the period 2014-2018.

Another source said Turkey was comfortable with the ruling since the penalty was much lower than originally expected. The source added that bilateral negotiations were underway between Turkey and Iraq to resolve the issue and would continue next week.

Local Iraqi media reported that Turkey stopped the pumping of Iraqi crude oil through Ceyhan on Saturday morning. Iraq was pumping 370,000 barrels of KRG crude and 75,000 barrels of federal crude through the pipeline a day before it was stopped, according to sources speaking to Reuters.

An industry insider said Ankara was making about $1bn as a transit country thanks to shipments in Iraq.

Iraq’s federal court last year also ruled that the law governing the oil industry in Iraqi Kurdistan was unconstitutional, and demanded that Kurdish authorities hand over their crude oil supplies.

More than a million barrels a day, about one percent of global supplies, passed through the Ceyhan terminal in January, according to data compiled by Bloomberg.

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