After skirmishes between ISIL and KRG forces around the Kirkuk and Bai Hassan fields, the KRG took over operations at the Avana Dome, a part of the Kirkuk field, and Bai Hassan in July 2014. Shortly after, KRG restarted commercial production at those fields, which allowed the KRG to increase oil flows through its newly built pipeline that connects to Ceyhan.
Meanwhile, Iraq's Northern Oil Company continued to produce about 120,000 bbl/d from the Kirkuk's Baba Dome, of which 30,000 bbl/d was sent to the Kirkuk refinery.16 The remainder of the oil production was reinjected into oil fields associated with natural gas to keep natural gas production flowing for power generation.
A December 2014 deal reached between Baghdad and the KRG has allowed Kirkuk crude to be transported via the KRG pipeline to Ceyhan, providing Baghdad with a commercial outlet for its northern production (see section on Issues between the Kurdistan Regional Government and Baghdad). Fighting around Kirkuk city continues to take place, making nearby fields vulnerable to supply disruptions.
International oil companies (IOCs) are very active in Iraq, including the Iraqi Kurdistan Region. IOCs operate under technical service contracts (TSCs) in Iraq, which are signed with the Ministry of Oil in Baghdad, and under production-sharing agreements (PSAs) in the Iraqi Kurdistan Region signed with the KRG. Over the years, KRG's push to sign PSAs with IOCs has escalated tensions with Baghdad, making the situation uncomfortable for some IOCs who have been pressured on different occasions to reduce their investments in Kurdistan.
Production in the northern region controlled by the KRG in the past has tended to fluctuate because of disputes with the central Iraqi government, but recently it has steadily increased. The U.S. Energy Information Administration (EIA) estimates KRG's crude oil production averaged 350,000 bbl/d during the second half of 2014. Increased pipeline capacity has allowed the KRG to increase output at its fields, while exporting it through the Turkish port of Ceyhan.
KRG's Ministry of Natural Resources reported that oil flows through the Kurdish crude pipeline to Turkey, which started in May 2014, reached as high as 300,000 bbl/d in November 2014,9 but pipeline flows fluctuated in 2014 typically averaging below that level. The KRG also trucks between 50,000 and 100,000 bbl/d of crude and condensate to the Turkish ports of Mersin, Dortyol, and Toros, and to Iran.
November 14 2009 Tawke Talk: Galbraith replies
Peter Galbraith said his work for DNO was never secret, and his ties to the company no longer exist. His former relationship with the oil firm now is the subject of an arbitration process in London, where he is pursuing damages for breach of contract.
"I do not have any business or financial interest in DNO," Galbraith said in an interview. "I also do not have any interest in any Kurdish oil field." He said he had disclosed his ties to DNO in documents he gave the U.N. when it hired him earlier this year.
After DNO, a Norwegian company, and Genel Energy, a Turkish company, struck oil at the Tawke field in Kurdistan this year, Baghdad originally refused to export their production over its pipelines. The cash-poor government eventually relented, however, giving its approval in late May.
Exports from Tawke and from a second site in Kurdistan, at the Taq Taq field, started June 1, but Baghdad has refused to pay the companies for the oil because it continues to regard their contracts with Kurdistan as illegal.
Meanwhile, officials in Kurdistan said they could not afford to pay because revenue from the fields went directly to Baghdad. Chief Financial Officer Haakon Sandborg said the figure relates to uncertainty over the timing and final pricing of exports, as and when payments are received from Baghdad, but said "it's not an expectation that we won't get revenue" and noted it could be reversed or changed. NYTimes
