| KHOR MOR, Iraq, Sept 9
KHOR MOR, Iraq, Sept 9 Kurdistan is taking its
first steps towards gaining independence from Baghdad in the
sale of its oil and gas with a convoy of trucks taking the
condensate liquid fuel bi-products of a remote gas field
directly into Turkey.
At least 15 trucks a day are loading up with high quality
condensate at Khor Mor's gas plant and then trundling down a
bumpy road to start the two-day journey to Mersin on the Turkish
In return, Turkey is trucking back small quantities of
diesel fuel and kerosene to use in the autonomous region's power
"It's a very simple but symbolic start to direct oil trade
between the Kurdistan Regional Government (KRG) and Turkey - and
there will be more to come," said an official familiar with the
barter-type operation between private companies.
"Neither side is thinking about stopping."
But Baghdad wants them to. It believes Iraq's central
government has the sole right to export oil and gas produced
throughout Iraq and says deliveries by truck from Kurdistan
across the border into Turkey are illegal.
Ankara is meanwhile encouraging the swap, which kicked off
with five tankers in July. And Turkish Energy Minister Taner
Yildiz says the volume could gradually build up to 200 trucks a
day - roughly 40,000 barrels per day (bpd).
Industry sources say the KRG is now supplying only Khor Mor
condensate, but crude oil from other fields will also be
"Turkey believes that Kurdistan's export of oil and gas does
not run contrary to Iraq's constitution," said the official, who
asked not to be named. "And Turkey is a logical exit route for
the KRG," he added.
The KRG's oil can be shipped to world markets through a
Baghdad-controlled pipeline from Kirkuk to the Turkish port of
But this has been a stop-start process over the years due to
a long-running feud between Baghdad and Arbil, the KRG's seat of
government, over oil and land rights.
The KRG halted exports in April in a dispute over payments
from Baghdad to companies working in the region. It restarted
them in August, but warned it would cut shipments by
mid-September if there was no progress on payments.
For now about 120,000 barrels a day of KRG oil is being
exported through the Iraq-Turkey pipeline and the KRG's energy
minister Ashti Hawrami says the region's oilfields could ship up
to 200,000 bpd. The central government exports roughly 2.4
million bpd, with much of that coming from Iraq's southern
At around 3,000 bpd, the condensate flow from Kurdistan's
Khor Mor field to Turkey is a mere trickle. But if it's sold on
the world market from Mersin, this very valuable product could
fetch over $100 a barrel, say oil market sources.
Khor Mor - developed by the UAE's Crescent Petroleum and
Dana Gas, alongside Austria's OMV and Mol
of Hungary - supplies gas for power stations in the
Kurdistan region, produces liquefied petroleum gas (LPG) and
pumps out up to 17,000 bpd of condensates.
Arbil is also routing some of the condensate volume to
Khurmala, where it is exported through the central government's
Iraq-Turkey pipeline system, industry sources say.
Technicians at Khor Mor declined to comment on the final
destination of the condensate because Kurdistan's Ministry of
Natural Resources is in charge of the marketing effort.
Kurdistan began its crude-for-products trade with Turkey in
order to help plug a product shortfall it says was created by
Baghdad. It receives only 15,000 bpd of fuel from southern Iraq,
far below its 140,000 bpd allocation, according to the Kurdistan
But Turkey's delivery has been slower than hoped, with the
first products crossing the border at the end of last month, say
industry sources. The process got bogged down in bureaucracy.
Ankara has increasingly courted Iraqi Kurds as its relations
with the Shi'ite-led central government in Baghdad have soured.
Turkey is a major investment and trading partner for Iraq,
especially for Kurdistan.
With open support from Ankara, Kurdistan has plans to begin
exporting its oil along a new 1 million bpd pipeline to the
Turkish border by August 2013. Production from the region is
expected to rise towards the 1 million mark by then.
"The KRG needs the infrastructure - they can't have trucks
bumper-to-bumper on the roads," says an oil industry source in
(Editing by Greg Mahlich)