Turkey to gain from upcoming oil pact with Iraq

• Deal expected within a year
• Iraq plans Turkey pipelines
• Contracts likely for Turkish firms

Turkey will gain from an expected oil pact with Baghdad that replaces a decades-old deal governing Iraq’s northern crude exports, analysts have said.

The agreement is due to be signed within a year. It will allow Iraq, Opec’s second-largest oil producer, to export a significant part of its crude production to Europe via Turkey through a pipeline network linking southern Iraqi oilfields with the Turkish border in the north.

Likely benefits include contracts for Turkish companies in Iraqi oilfields that account for much of the planned capacity increase.

“We held a meeting with the Turkish energy minister to continue preparing the draft Iraqi-Turkish agreement for exporting oil via Ceyhan,” Iraqi oil minister Bassim Khudair said in a statement on Sunday.

“Discussions were also held regarding the participation of Turkish companies in Iraqi oil and gas projects… this is very important to both countries, especially Iraq, as it contributes to attracting qualified international companies to develop and invest in oil and gas.”

The minister said the two sides agreed to form committees that deal with oilfield investments and to develop infrastructure for hydrocarbon facilities in Iraq, home to the world’s fifth-largest extractable crude reserves.

Iraq plans to build pipelines for transporting more crude via Turkey and to revive oil exports through Syria after an old pipeline that sent crude from Kirkuk to the western Syrian port of Baniyas sustained heavy damage in conflicts.

In April, Iraq’s cabinet approved about $1.5 billion for a $5 billion project to construct a pipeline from Basra to Haditha in western Al-Anbar province, from where it will extend to Turkey, Syria and possibly Jordan.

“Turkey could secure new contracts and enter joint ventures for petrochemicals in Iraq, while it is also becoming a major export outlet for Iraq,” economics professor Nabil Al-Marsoomi said.

“This framework agreement will eclipse the previous pact, which covered only the Kirkuk-Ceyhan oil pipeline… the closure of Hormuz has made Iraq more reliant on Turkey regarding its oil and other exports.”

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Iraq’s oil ministry said the Ankara talks covered a proposed roadmap for enhancing bilateral cooperation in developing infrastructure for oil, gas and petrochemicals.

“This inaugural meeting, marking the start of negotiations on a framework agreement between Iraq and Turkey, aims to lay the foundations for cooperation,” the ministry said.

In late July, Iraq and Turkey signed a one-year agreement on maintaining use of the crude oil pipeline between the ‌two countries, Turkish energy minister Alparslan Bayraktar was cited by Reuters as saying.

The pact extended a 53-year-old bilateral arrangement that expired on July 2.