KRG Exporting But Fiscal Independence Distant
BMI View: Iraq's semi-autonomous Kurdistan region is close to completing its first sale of oil piped to the Turkish port of Ceyhan, with the SCF Altai tanker expected to unload in Israel. Despite this development, the Iraqi Kurdistan region will struggle to replace the reduced budget revenues received from Baghdad, and will remain dependent on the government for financial stability for the foreseeable future.
The first shipment of Iraqi Kurdistan oil is reportedly due to be offloaded at Ashkelon, Israel. While oil from Kurdistan has been moving across the border into Turkey by truck since 2013, this shipment marks a crucial step in the Kurdistan Regional Government's (KRG) ability to profit from the far larger pipeline export route. A pipeline from the Taq Taq field to Fishkabur on the border with Turkey was completed in late 2013, connecting a capacity of around 200,000 barrels per day (b/d) with the pipeline to Ceyhan. With insurgency in north-western Iraq keeping the Kirkuk-Ceyhan pipeline offline since March 2 2014 ( see 'Blocked Northern Route Limiting Exports', April 11), the KRG has been able to move around 120,000b/d of oil to the Turkish Port.
To date, two tankers have been loaded in Ceyhan with oil from Iraqi Kurdistan. The first tanker to be loaded - United Leadership - remains moored offshore Morocco after being refused entry to the port at Mohammedia. The second tanker - United Emblem - reportedly made a ship-to-ship cargo transfer with the SCF Altai, which is now heading towards Ashkelon. A third tanker is due to be loaded at Ceyhan, while a fourth and fifth have also reportedly been lined up for loadings before the end of the month.