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(Bloomberg) — Turkey is said to have reached an agreement with Iraq to extend an expired oil pipeline deal by one year, ensuring supply through an exports route that bypasses the Strait of Hormuz.
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Iraqi exporters will continue to ship crude oil through the 986-kilometer (613-mile) pipeline from Kirkuk to Turkey’s Mediterranean port of Ceyhan, people familiar with the matter said on Saturday, asking not to be identified discussing private information.
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Turkey’s Energy Ministry declined to comment. Iraqi Oil Ministry Spokesman Salim Al-Rikabi confirmed the one-year extension to Bloomberg by phone.
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The agreement is expected to be backdated to July 27, the expiry date of the previous deal, which had been in place for 53 years. Flows continued uninterrupted this week as negotiations proceeded.
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The agreement secures supply for oil markets that have been rattled by the Iran war’s disruption of exports through the Strait of Hormuz.
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The deal comes after Ankara invested in upstream production in Kirkuk. State oil company Turkiye Petrolleri AO announced as negotiations between Turkey and Iraq were ongoing that it would take a 15% stake in BP Energy Company of Kirkuk Limited, a consortium redeveloping oil and gas fields in the region. Financial terms for the deal weren’t disclosed.
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The pipeline’s technical capacity is 1.5 million barrels per day, though it’s long been underutilized. Exports were running at about 180,000 barrels per day in June, the director general of Iraq’s State Oil Marketing Organization said at the time.
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Flows along the Kirkuk-Ceyhan pipeline were previously disrupted by a long-running legal dispute between the two countries.
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In 2023, the International Court of Arbitration ordered Turkey to pay Iraq $1.5 billion for shipping Iraqi Kurdish oil without the approval of the central government in Baghdad. Turkey rejected the ruling and sought to negotiate a broader deal with Baghdad.
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Oil resumed flowing last September after a two-and-a-half-year pause, before a brief interruption in March due to the war.
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