Iraq on Sunday urged foreign countries to stop importing crude directly from its autonomous Kurdistan region and to restrict oil trading to the central government.

The call, published in statement from Prime Minister Haider al-Abadi's office, came in retaliation for the Kurdistan Regional Government's plan to hold a referendum on independence on Monday.

The central government's statement seems to be directed primarily at Turkey, the transit country for all the crude produced in Kurdistan. The crude is taken by pipeline to the Turkish Mediterranean coast for export.

Baghdad "asks the neighboring countries and the countries of the world to deal exclusively with the federal government of Iraq in regards to entry posts and oil," the statement said.

The Iraqi government has always opposed independent sales of crude by the KRG, and tried on many occasions to block Kurdish oil shipments.

Long-standing disputes over land and oil resources are among the main reasons cited by the KRG to ask for independence.

Iraqi Kurdistan produces around 650,000 barrels per day of crude from its fields, including around 150,000 from the disputed areas of Kirkuk.

The region's production volumes represent 15 percent of total Iraqi output and around 0.7 percent of global oil production. The KRG aspires to raise production to over 1 million barrels per day by the end of this decade.

Kurdish oil production has been dominated by mid-sized oil companies such as Genel, DNO, Gulf Keystone and Dana Gas. Major oil companies such as Chevron, Exxon Mobil and Rosneft also have projects in Kurdistan but they are mostly at an exploration stage.

However, Rosneft, Russia's state oil major, has lent over $1 billion to the KRG guaranteed by oil sales and committed a total of $4 billion to various projects in Kurdistan. </s> BAGHDAD (Reuters) - Iraq on Sunday urged foreign countries to stop importing crude directly from its autonomous Kurdistan region and to restrict oil trading to the central government.

FILE PHOTO:Iraqi Prime Minister Haider al-Abadi delivers remarks at the morning ministerial plenary for the Global Coalition working to Defeat ISIS at the State Department in Washington, U.S., March 22, 2017. REUTERS/Joshua Roberts/File Photo

The call, published in statement from Prime Minister Haider al-Abadi’s office, came in retaliation for the Kurdistan Regional Government’s plan to hold a referendum on independence on Monday.

The central government’s statement seems to be directed primarily at Turkey, the transit country for all the crude produced in Kurdistan. The crude is taken by pipeline to the Turkish Mediterranean coast for export.

Baghdad “asks the neighboring countries and the countries of the world to deal exclusively with the federal government of Iraq in regards to entry posts and oil,” the statement said.

The Iraqi government has always opposed independent sales of crude by the KRG, and tried on many occasions to block Kurdish oil shipments.

Long-standing disputes over land and oil resources are among the main reasons cited by the KRG to ask for independence.

Iraqi Kurdistan produces around 650,000 barrels per day of crude from its fields, including around 150,000 from the disputed areas of Kirkuk.

The region’s production volumes represent 15 percent of total Iraqi output and around 0.7 percent of global oil production. The KRG aspires to raise production to over 1 million barrels per day by the end of this decade.

Kurdish oil production has been dominated by mid-sized oil companies such as Genel (GENL.L), DNO (DNO.OL), Gulf Keystone (GKP.L) and Dana Gas (DANA.AD). Major oil companies such as Chevron (CVX.N), Exxon Mobil (XOM.N) and Rosneft (ROSN.MM) also have projects in Kurdistan but they are mostly at an exploration stage.

However, Rosneft, Russia’s state oil major, has lent over $1 billion to the KRG guaranteed by oil sales and committed a total of $4 billion to various projects in Kurdistan. </s> In this Wednesday photo, Iraqi firefighters battle large fire at oil wells as they are trying to prevent the flames from reaching the residential neighbourhoods in Qayyarah, Iraq (AP photo)

LONDON — Iraqi state oil firm SOMO and Iraq's semi-autonomous region of Kurdistan have begun jointly exporting crude oil from the giant Kirkuk oilfield again after cutting a preliminary deal on revenue-sharing, trading sources said on Thursday.

The development signals a breakthrough in relations between Baghdad and Erbil, which have been disputing how to share oil and budget revenues for several years amid fiscal problems on both sides and their fight against the terror group, Daesh, militants.

The Kirkuk flows, usually amounting to 150,000 barrels per day and exported via the Turkish Mediterranean port of Ceyhan, had been suspended since March as Baghdad pushed Kurdistan to cut a new deal.

Before March, Kirkuk flows were unilaterally handled by Kurdistan. SOMO, the State Oil Marketing Organisation, had seen no cargoes exported on its behalf from Ceyhan since mid-2015, when Kurdistan began independent sales of its own crude and Kirkuk oil.

"Shipments on behalf of SOMO have resumed as of six o'clock this morning... While final details of the revenue-sharing deal are still being worked out, the current flows of Kirkuk are being split 50/50 between SOMO and Kurdistan," one shipping source familiar with the operations said.

Besides Kirkuk, Kurdistan produces around 500,000 barrels per day of crude from its own fields and those will still be marketed independently by the semi-autonomous region.

But the compromise over Kirkuk could be the first step towards a comprehensive deal involving all Kurdish oil.

Baghdad has insisted SOMO is the only entity that can market Iraqi crude. Kurdistan started independent exports after accusing Baghdad of not respecting a previous revenue-sharing deal and not transferring enough money from the federal budget.

Baghdad, which exports most of its oil from the Gulf, has said Erbil was not exporting enough crude under that deal.

Kurdistan urgently needed Kirkuk flows to resume because its own exports do not cover its budget needs, forcing the region to borrow billions of dollars from Turkey, oil firms and trading houses guaranteed by future oil sales.

Lost revenues from the halt in Kirkuk flows had been estimated at more than $1 billion since March.

Last week, Baghdad said that if a new revenue deal were not reached, oil from Kirkuk could be exported by truck via Iran. This week, SOMO blacklisted three ships involved in exporting Kurdish oil.

However, a meeting between Iraqi Prime Minister Haider Al Abadi and Nechirvan Barzani, prime minister of the Kurdistan regional government, seems to have broken the ice this week with a preliminary deal reached on Kirkuk oil.

The trading source said final details on how to split the Kirkuk flows could be worked out by mid-September.

Ezat Sabir, head of the Finance Committee in the Kurdish Council of Ministers, said his understanding was that the 50/50 split of Kirkuk oil would remain until the year-end, after which Baghdad and Erbil would try to return to full revenue-sharing.

Erbil has said it was ready to hand over all oil exports to SOMO if Baghdad agreed to transfer $1 billion to Erbil from the federal budget each month. </s> ANKARA, Jan 8 (Reuters) - Iraqi Kurdistan is set to start exporting its first parcel of 2 million barrels of oil via a new pipeline through Turkey at the end of this month, the Kurdistan Regional Government said on Wednesday.

Exports will rise to 4 million barrels and 6 million barrels in February and March respectively, and eventually reach 10-12 million barrels in December, the semi-autonomous region said in a statement on its website.

Iraqi Kurds and the central government in Baghdad have been at loggerheads over the share of oil revenues. Baghdad, which claims the sole authority to manage Iraqi oil, was infuriated after Arbil signed a package of contracts with Turkey for oil and gas exports as well as the construction of new pipelines. (Reporting by Humeyra Pamuk; Editing by Mike Collett-White) </s> ANKARA, Jan 8 (Reuters) - The first crude has started to flow through Iraqi Kurdistan’s new pipeline across Turkey and the first independent exports are expected to begin at the end of this month, the Kurdistan Regional Government (KRG) said on Wednesday.

The first parcel of 2 million barrels of oil will be sold via a tender, KRG’s Ministry of Natural Resources said on the government’s web site. It invited bidders for the January tender.

The monthly export parcels will then increase to 4 million barrels and 6 million barrels in February and March respectively, it said. The monthly exports are estimated to reach 10-12 million barrels in December.

Iraqi Kurds and the central government in Baghdad have been at loggerheads over the share of oil revenues.

Baghdad, which claims the sole authority to manage Iraqi oil, was infuriated after Arbil signed a package of contracts with Turkey for oil and gas exports as well as for the construction of new pipelines.

The Baghdad government says Kurdish efforts towards oil independence could lead to the break-up of Iraq. Turkey’s courtship of the Iraqi Kurds has also raised concern in Washington.

But Turkey has repeatedly said it respects Iraq’s sensitivities over territorial integrity and that increasing oil revenues will help the whole of Iraq.

Ankara has been working to get Baghdad on board and proposed setting up an escrow account at a Turkish state bank for the oil revenues to be deposited. The Iraqi government has yet to agree on the Turkish proposals.

KRG’s new pipeline carries the Iraqi Kurdish oil to Turkey’s Mediterranean export hub of Ceyhan. It is initially carrying heavy oil from Tawke fields and links up with the 40-inch-wide existing Kirkuk-Ceyhan pipeline to be exported to world markets.

“Crude oil from Taq Taq and other producing fields will soon be added to the export system, resulting in a blended medium crude oil..,” the KRG statement said.

Prospective buyers will be able to lift crude oil shipments in Ceyhan “under similar arrangements” as those used for Iraq’s State Oil Marketing Organisation (SOMO) for oil exports from Kirkuk.

Details of each parcel will be announced by the Ministry of Natural Resources and independent observers as well as representatives from SOMO will be invited to monitor the process, KRG said. </s> * Term crude made up about 53 pct of 2013 Iraqi crude imports

* Iraq since 2011 ranks as fourth-biggest crude supplier to S.Korea

SINGAPORE/SEOUL, Feb 28 (Reuters) - South Korean refiners are set to import about a quarter more Iraqi term crude this year, industry sources said, as oil from other Middle Eastern suppliers is squeezed out by higher pricing or limits on Iranian supply due to sanctions.

Despite concerns about security, Iraq is still aiming for its largest annual rise in oil exports in a decade this year, and Asia’s crude buyers including China and South Korea have been signing larger annual import contracts.

Iraq’s Basra light grade has also been a primary replacement for Iranian crude exports, which have been cut in half over the last two years by Western sanctions aimed at Tehran’s disputed nuclear programme.

On top of the term crude, which made up just over half of South Korea’s Iraqi imports last year, Korean refiners say they will keep buying spot supplies from Iraq as long as prices remain competitive compared to other suppliers.

“Iraqi crude oil has good economics and ... it has been replacing Iranian crude demand as their qualities are similar. Crude oils from Qatar and Oman are too expensive,” a Seoul-based refining source said.

“By how much Iraq imports can increase in the future depends on the development of sanctions on Iran,” he added.

Iran’s exports to its top Asia buyers surpassed 1 million barrels per day (bpd) in January, a sign its oil shipments may creep up after the implementation of an interim deal that eases some of the U.S. and EU sanctions applied over Tehran’s nuclear programme.

China will increase its annual purchase of Iraqi crude by more than two-thirds next year to meet growing demand in the world’s largest net oil importer, trade sources said in November.

South Korea’s second-largest refiner, GS Caltex Corp , will account for most of the country’s rise in Iraqi term imports, increasing its Basra light contract purchases for 2014 to 133,000 bpd, up from 100,000 bpd, industry sources said.

The biggest refiner SK Energy Co Ltd has kept its term Iraqi volumes steady at 33,000 bpd, the sources said.

The term import contracts alone will rise 25 percent to 166,000 bpd from 133,000 bpd in 2014, they said.

SK Energy and GS Caltex spokesmen declined to comment on the term contracts.

South Korea’s Hyundai Oilbank Co Ltd buys Basra light in the spot market. A company source with direct knowledge of the matter said the refiner bought about 30,000 bpd on the spot market last year and will continue to do so as long as the prices remain competitive.

“Unless Iraq raises the official selling price of its crude, our purchases would continue,” said a source at GS Caltex.

Iraqi crude shipped to South Korea was about $2.20 a barrel cheaper than Omani oil on average last year, according to data from the country’s customs office.

State-run Korea National Oil Corp (KNOC), which manages the country’s strategic oil reserves, has also started replacing some Oman with Basra light in its tanks as more refiners are using the Iraqi grade, said sources familiar with the matter.

The country’s other refiner, S-Oil Corp, mainly buys crude from its major shareholder Saudi Aramco.

South Korea, the world’s fifth-largest crude importer, relied on the Middle East for around 85 percent of its crude supply in 2013, although it has sharply reduced imports from Iran and Oman in favour of Iraqi oil in recent years, according to industry data.

South Korea’s imports of Iraqi term and spot crude have grown to just more than 253,000 bpd last year, from about 116,800 bpd in 2008, according to South Korea customs data.

Iraq remained South Korea’s fourth-biggest supplier last year, after Saudi Arabia, Kuwait and Abu Dhabi.

Over the last three years, South Korea’s imports of crude from Iraq grew more than 50 percent in 2011 and 8 percent in 2012, followed by a slight dip last year, according to South Korea’s customs data.

In contrast, Iranian supply averaged around 132,000 bpd in 2013, down 14 percent from the previous year, as South Korea scaled back imports to avoid U.S. sanctions, KNOC data showed. KNOC data do not break down crude imports from Iraq.

Omani crude imports fell by 60 percent last year to just over 9,700 bpd, from 24,000 bpd a year ago, KNOC data showed. (Additional reporting by Jane Chung in SEOUL; Editing by Tom Hogue) </s> * Its oil imports from Iran fell over 30% in Oct from Sept

ANKARA, Dec 5 Turkey has not received any new request from the United States to reduce the level of its crude oil purchases from Iran and is continuing with its existing level of imports, Turkish Energy Minister Taner Yildiz told Reuters on Wednesday.

In June Washington exempted Turkey, along with six other countries, from financial sanctions on Iran's oil trade for six months in return for a 20 percent cut in Ankara's purchases.

Last week, the U.S. Senate approved expanded sanctions on global trade with Iran's energy and shipping sectors as it continued to ratchet up economic pressure on Tehran over its nuclear programme.

The new package kept in place exemptions for countries including Turkey that have made significant cuts to their purchases of Iranian crude oil.

"There is no new demand from the USA to reduce the amount of crude oil which we get from Iran," Yildiz said.

"Whatever the current process is for purchasing crude oil from Iran, we are continuing that in the same way," he added.

Official trade data last month showed Turkey's crude oil imports from Iran fell by more than 30 percent to 75,281 barrels per day (bpd) in October from September as volumes of oil from other suppliers including Iraq and Saudi Arabia increased.

The Islamic Republic, which once supplied more than 60 percent of Turkey's crude requirements, ranked third in October behind Iraq and Russia.

Washington says Tehran is enriching uranium to levels that could be used in nuclear weapons. Iran says the programme is for peaceful purposes.

In natural gas, Turkey accounts for about 90 percent of exports from Iran, which ranks second as its supplier behind Russia.

Yildiz told reporters in parliament that Turkey had held talks with the United States on the subject and that Washington had agreed not to impose sanctions on its natural gas purchases from Iran.

"We said to them, if you tell us not to buy gas from Iran, that would be a sanction on Turkey and not on Iran. They agreed not to include natural gas agreements in the sanctions," Yildiz said.

Turkey pays for the gas using Turkish lira, which Tehran uses to buy Turkish gold. Couriers carry the gold to Dubai and from there, it is shipped to Iran.

Separately, Yildiz said Turkey's energy investments in Iraq were continuing as planned.

His comments came a day after a plane carrying him to a conference in Iraqi Kurdistan was denied permission to land.

Iraq's central government in Baghdad, which has been locked in a feud over oil and land rights with the Kurdistan Regional Government (KRG) in the north, has been riled by Turkey's recent moves aimed at forging closer ties with the Iraqi Kurds. </s> BASRA, Iraq (Reuters) - Iraqi police used batons and rubber hoses to disperse about 250 protesters at the main entrance to the giant Zubair oilfield near Basra on Tuesday as unrest across southern cities over poor basic services gathers pace.

Since demonstrations began nine days ago, protesters have attacked government buildings, branches of political parties and powerful Shi’ite militias and stormed the international airport in the holy city of Najaf.

Officials and industry sources said the protests have not affected output at Zubair, run by Italy’s Eni, and the other major oilfields including Rumaila developed by BP and West Qurna 2 managed by Lukoil.

Many Iraqis believe their Iraqi leaders do not share the country’s oil wealth. Some demonstrators said foreign laborers were robbing them of employment at oil companies. Three protesters have been killed, including one at West Qurna 2.

“We the people of Basra hear about the Iraqi oil and its huge revenues, but we never enjoy its benefits,” said 24-year-old protester Esam Jabbar.

“Strangers have decent jobs at our oilfields and we don’t have the money to pay for a cigarette. That’s wrong and must be stopped.” Jabbar said he was unemployed.

Iraq is the second-largest producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia.

Crude exports account for 95 percent of state revenue and any disruptions could badly damage its already limping economy at a time when Iraq needs tens of billions of dollars to rebuild after the three-year war with Islamic State.

Prolonged instability in the south could drive up global oil prices. Production at the Zubair field was 475,000 bpd, an Iraqi oil official said in May.

Iraq exported an average of 3.566 million barrels per day from its southern oilfields so far in July, said senior oil officials, levels confirming that the troubles have not disrupted crude shipments from the region.

Demonstrators, who have endured sweltering heat to press their demands, show no sign of letting up.

“We had orders not to use live fire but we also have orders not to allow anyone to disrupt operations at oilfields and we will take necessary measures to keep the protesters away from the fields,” said a policeman at the scene.

Protests over the same issues have occurred in the past. The unrest this time is more widespread and is politically-sensitive.

Prime Minister Haider al-Abadi is seeking a second term after a May 12 parliamentary election tainted by allegations of corruption.

Politicians are struggling to form a coalition government. Populist Shi’ite cleric Moqtada al-Sadr, whose political bloc won the majority in the poll, may now be in a stronger position to influence the choice of prime minister.

He defeated Iranian-backed rivals by promising to generate jobs, help the poor and eradicate corruption.

The Shi’ite heartland south has long been neglected despite its oil wealth, first by Sunni dictator Saddam Hussein and then Shi’ite-led governments after him, including Abadi’s.

Murtadha Rahman, 22, ran barefoot on the scorching pavement to try and escape a charge by police outside the Zubair field.

“I live in a place which is rich with oil that brings billions of dollars while I work in collecting garbage to desperately feed my two kids. I want a simple job, that’s my only demand,” said Rahman, who said he was beaten by police.

“I won’t go even if you kill me I will stay her. I want a job.”

In a meeting with government officials carried on state television, Abadi promised to allocate funds for water and electricity and create jobs in Basra, once dubbed the “Venice of the Middle East” for its network of canals. </s> The backlash against the Kurdish referendum continues:

The Iraqi ultimatum follows Iran’s move to close its land border with Iraqi Kurdistan after it had already closed its airspace to flights in and out of the region. Turkey is threatening to shut down oil exports out of Kurdistan:

Turkey can choose to “close the valves” on oil exports from Iraq’s Kurdish region through the Turkish port of Ceyhan, President Recep Tayyip Erdogan warned as Kurds voted in a referendum on independence from Iraq. The landlocked Kurdish enclave in northern Iraq can ship as much as 700,000 barrels a day through the pipeline to Ceyhan on the Mediterranean. The Turkish president’s comments served as a reminder that Iraq’s semi-autonomous Kurdistan Regional Government depends on good relations with neighboring Turkey for most of its oil sales.

Just as Iraqi Kurdistan depends on good relations with its neighbors to export its oil, it is heavily dependent on imports from the outside. According to the FT, around 80% of their goods are imported. If both Turkey and Iran decide to wage an economic war on Kurdistan in coordination with Baghdad, the region will be deprived of both revenue and goods and their economy will be ruined. The dependence on food imports is even greater:

The shelves of any supermarket in the region illuminate the risk for the Kurdish region: Almost all products are either trucked through or made in Turkey. “Everything is imported,” said Amer Abdullah, 40, who sells foodstuffs brought from Turkey at the wholesale market. “If the borders are closed, in one month everything would be finished.”

These are the conditions that make a viable independent Kurdistan practically impossible so long as its neighbors are determined to oppose it. The economic ties that supporters of the referendum assumed would protect Kurdistan from retaliatory measures had the opposite effect: it is the region’s economic dependence on its neighbors that makes its political independence against their wishes hard to imagine. This week Alex Dziadosz made the economic case against a Kurdish state:

Because the KRG’s roughly 600,000 barrels per day of oil exports are piped almost exclusively through Turkey to the port of Ceyhan, Ankara has enormous leverage not only over the region’s economy, but over the resource-distribution systems underlying social stability, such as the government’s ability to pay salaries. “Oil is the main source of revenue in the region and all of that falls into the government’s coffers. So that’s it—the KRG’s economy depends on one pipeline that sells oil to international markets and the pipeline goes through Turkey. You shut down that pipeline, you choke the Kurdish economy,” Bilal Wahab, an analyst at the Washington Institute for Near East Policy, told me. The other major problem is the region’s heavy reliance on imports, which account for some 80 to 90 percent of goods, analysts estimate. The region produces significant amounts of cement, steel, and wheat, but little else. Walk through Erbil’s downtown market and you will see pomegranates from Egypt, apples from Iran, and peaches and eggs from Turkey—not to mention clothes and household goods from China and cigarettes from as far as South Korea. Because Kurdistan is land-locked, shutting its borders with Iran and Turkey and airspace through Iraq could quickly lead to sharp spikes in prices or shortages of basic goods such as food and fuel. A coordinated blockade by the region’s neighbors would be devastating.

It was a measure of how weak the case for an independent Kurdistan was that all of these practical obstacles have been ignored or waved away by supporters. Proponents of backing a new Kurdish state are in such a hurry to turn it into their latest vehicle for hostility to Iran that they failed to think through how much leverage the governments opposed to the new state have over the region. The U.S. should urge all parties to refrain from additional actions that would inflame the situation, but there is not much else that the U.S. can do at this point.
The Iraqi government discourages foreign countries from importing crude oil directly from its Iraqi Kurdistan region.