Turkiye and Iraq sign one-year oil pipeline deal amid global shift

Ankara and Baghdad have signed a one-year agreement to keep crude flowing through the Kirkuk-Ceyhan Oil Pipeline that stretches from Iraq to Turkiye, just days after a top-level visit to Ankara by Iraq’s prime minister.

The deal – struck between Turkish state firm BOTAS and Iraq’s state oil companies SOMO and NOC on Saturday – comes days after the decades-old bilateral arrangement lapsed on Monday last week.

In a post on X, Turkish Energy Minister Alparslan Bayraktar said the agreement was signed following a “productive meeting” in Ankara with Iraqi Oil Minister Bassem Mohammed Khudair.

“While our efforts continue toward a new long-term agreement for this pipeline … we have implemented this transit arrangement covering a daily capacity of 750,000 barrels,” he wrote.

The Iraq-Turkiye pipeline has a maximum capacity of about 1.5 million barrels per day (bpd), although actual flows have been well below that in recent years.

Iraqi Prime Minister Ali al-Zaidi hailed the deal in a post on X, describing it as “an important strategic milestone”.

As Iraqi and Turkish companies commence their tasks, the two governments “will work … to complete a framework agreement that includes sectors such as oil, electricity, water resources, and other areas of cooperation that bolster shared interests and support development and stability,” al-Zaidi added.

The signing comes four days after Turkish President Recep Tayyip Erdogan and al-Zaidi met in Ankara.

Bayraktar said that the deal “holds a more strategic position” given the developments in global oil markets.

Iran’s effective closure of the Strait of Hormuz earlier this year forced Baghdad to scramble for alternative export routes. The flow of oil between the two countries is expected to extend Baghdad’s only functioning oil export route to the Mediterranean.

Iraqi oil exports collapsed by more than 80 percent in the weeks after the United States and Israel launched strikes on Iran in late February, with monthly oil revenues falling from around $6bn to under $2bn as shipments through the Gulf were disrupted.

The Kirkuk-Ceyhan Oil Pipeline currently carries only about 170,000 bpd of its 1.5-million-bpd capacity, according to Turkish data, largely from fields in Iraq’s Kurdistan region, which have themselves faced repeated drone and missile attacks since the Iran conflict began.

Ankara seeks to extend the pipeline eventually to carry crude from Iraq’s southern fields as well, with both sides describing talks on a longer-term deal as ongoing.