Iraq-Turkey oil pipeline set to resume operations soon: Minister

Iraq's northern oil export route through Turkey will soon be ready to resume operation after checks on pipeline maintenance and repairs to flood damage, Turkish Energy Minister Alparslan Bayraktar announced on Friday.

The pipeline, which contributes to approximately 0.5% of the global oil supply, is technically ready to resume operation following extensive maintenance and flood damage repairs.

Turkey had halted flows on this vital oil export route on March 25, following an arbitration ruling by the International Chamber of Commerce (ICC). The ruling required Ankara to pay Baghdad damages amounting from unauthorized exports that were facilitated by the Kurdistan Regional Government (KRG) between 2014 and 2018. Consequently, Turkey initiated maintenance work on the pipeline, which not only traverses a seismically active zone but has also been battered by floods.

The energy minister refrained from providing a specific date for the resumption of oil flows but stated that an independent surveyor had completed the necessary evaluations. As it stands, the minister confirmed that preparations were underway for the compilation of the final report regarding the pipeline's condition and readiness.

In a briefing held by the ministry on Thursday, Bayraktar underscored the imperative need for both Iraq and Turkey to reach an amicable solution that safeguards their respective interests. Given the present legal complications, the minister anticipates potential court challenges in the future.

The financial stakes surrounding the dispute are considerable. Apart from the $4 billion lost in exports by the KRG, Turkey asserts that Iraq is indebted to them to the tune of $950 million - a net result of the ICC arbitration. The ongoing legal tussle has seen Iraq initiating an enforcement case in a U.S. federal court back in April, seeking to implement a $1.5 billion arbitration award.

Looking forward, Turkey is keen on urging Baghdad to retract a second arbitration case, which covers incidents from 2018 onwards, in favor of negotiating a reduced payment. Moreover, Bayraktar emphasized that both Erbil and Baghdad should come to a consensus regarding the pipeline agreement's continuance, slated to lapse in 2026, thereby paving the way for smoother operations in the years to come.