Iraq to divert most Kirkuk oilfield output to Iraqi refineries, says official

Iraq is preparing to divert most future output from Kirkuk oilfield to local refineries as a conflict with Kurdish regional authorities over the use of an export pipeline to Turkey continues, an Iraqi official said on Monday.

Kirkuk’s production stopped in mid-October after Iraqi forces dislodged Kurdish fighters from Kirkuk and took over the northern region’s oilfields.

Diverting Kirkuk’s crude to Dora, a refinery near Baghdad, and to another one in Baiji, north of the capital, would help free up more oil for exports from the southern region, the official told Reuters.

Some Kirkuk crude would also be shipped “in the near future” by trucks to Iran’s Kermanshah refinery, at a rate of 30,000 barrels per day, the official said, declining to be identified.

The takeover of Kirkuk, a mixed area which had been under Kurdish control since 2014, was part of retaliatory measures taken by the Iraqi government against a referendum for Kurdish independence held in September in northern Iraq.

Kirkuk lies just outside the official boundaries of the semi-autonomous Kurdistan Regional Government (KRG).

Its fields used to supply about half the crude carried by a pipeline across the KRG territory to Ceyhan, a Turkish export terminal on the Mediterranean. The other half is supplied by fields located inside the KRG territory.

Oil flows through the pipeline were reported last week at around 270,000 bpd. Before the crisis flows usually stood at about 600,000 bpd, roughly 17 percent of Iraq’s total exports.

OPEC’s second-largest producer after Saudi Arabia, Iraq exports most of its crude from the southern region.

The Kurds have refused to hand over to the Iraqi authorities Khurmala, a reservoir which is part of the geological structure of the Kirkuk oil basin but geographically inside the KRG territory, the Iraqi oil official said.

The official said the government wanted Khurmala to be under control of state-run North Oil Company, like the rest of the Kirkuk reservoirs.[nL8N1MU2AZ]

Reporting by Ahmed Rasheed; writing by Maher Chamytelli; Editing by Susan Fenton and Edmund Blair