* Kurdistan developing increasingly independent oil sector
* Set to begin metering its own exports next year
* Rising output means second export pipeline needed
* Baghdad cautions Turkey to respect agreements
By Humeyra Pamuk
ISTANBUL, Oct 31 Iraq's northern Kurdistan
region plans to build a second new oil export pipeline to Turkey
within the next two years as it ramps up output independently of
Baghdad, the region's natural resources minister said on
Speaking at an energy conference in Istanbul, Ashti Hawrami,
a member of the Kurdistan Regional Government (KRG), outlined an
ambitious oil export growth strategy for the autonomous region,
whose growing independence has angered Baghdad.
Construction of the first pipeline to Turkey is complete,
and it is being tested ahead of the start of commercial
shipments in the first quarter of 2014, officials said.
Kurdistan will track the volumes of its sharply rising crude
oil exports on the pipeline independently of the central
government, Hawrami said, adding the region ultimately aimed to
produce 3 million barrels per day of oil for export.
"Oil and gas exports are not the monopoly of anyone in
Baghdad," Hawrami said. "It is our duty to pursue oil and gas
routes independently... Turkey has been the quickest to
recognise the new realities of the region."
Energy-dependent Turkey has quietly built up a large
commercial presence in northern Iraq and has courted Iraqi Kurds
to form a closer partnership, a move that has infuriated
Baghdad, which claims the sole authority to manage Iraqi oil.
The Arab-led central government, at odds with the
Kurdish-run enclave over control of oilfields and revenue
sharing, has warned that independent Kurdish efforts to export
its oil could ultimately lead to the break-up of Iraq.
"Turkey is aware of Iraq's concern... We have reminded
Turkey that this is in breach of the agreement between the two
countries that regulates exports from Iraq through the Turkish
pipeline," Iraq's deputy prime minister for energy, Hussain
al-Shahristani, told Reuters in Baghdad.
"Turkey assured us they respect that agreement and they will
not allow any export of Iraqi crude without the permission of
the federal government in Baghdad," he said.
But neither calls from Baghdad nor Washington have been
enough to deter the Turks, the Kurds or the oil companies from
forging ahead. Exxon Mobil, Chevron and Total
have already signed exploration deals with Kurdistan.
A state-backed Turkish firm also was set up earlier this
year to explore for oil and gas in Kurdistan as part of a
strategy driven by Turkish Prime Minister Tayyip Erdogan.
Erdogan was meeting Iraqi Kurdistan Prime Minister Nacirvan
Barzani in Istanbul as Hawrami spoke, a meeting at which energy
cooperation was high on the agenda.
"We have shared our view that we want to increase our energy
cooperation with both northern Iraq and with the Iraqi central
government," said Turkish Foreign Minister Ahmet Davutoglu, who
also met Barzani.
"We will continue to deepen our relations with all sides in
Iraq," he told a news conference.
Kurdistan's first new pipeline will connect to an existing
Iraq-Turkey line, which carries Kirkuk crude to the
Mediterranean export outlet of Ceyhan. That pipeline has a
capacity of around 1.5-1.6 million bpd but is poorly utilised.
Hawrami said Kurdistan's oil would first use the spare
capacity in the Kirkuk-Ceyhan line but that once the region's
production was ramped up, a second pipeline would be needed.
"We hope to complete this (second) pipeline in the next 18
months to two years," he said, adding its capacity would be at
least 1 million bpd.
The first pipeline will connect to Kirkuk-Ceyhan on Iraqi
territory, a decision whose implementation is being closely
watched by the industry, but that does not mean Baghdad will
have control over the exports, Hawrami said.
"We will independently monitor it... When we linked it to
Baghdad's pipeline before, we lost thousands of barrels of oil,"
he said. "The pipeline is in our territory, and the ownership of
the pipeline is where it lies."
Details of revenue sharing, the issue at the heart of the
dispute with Baghdad, have yet to be clarified.
Turkey has repeatedly said it stands ready to support an
arrangement under which 83 percent of oil export revenue goes to
Baghdad and the remaining 17 percent to Kurdistan, based on the
Iraqi constitution. There was even talk of opening an escrow
account in Turkey.
Hawrami declined to give details.
"The net revenue belongs to all of us in Iraq; that's what
we say should be subject to revenue-sharing," he said.