Kurdistan Oil Best Alternative to Iranian Crude for Turkey: Report

03/05/2019 - 17:29 Published in Reports

Turkey could take into consideration the Kurdistan oil to feed its refineries as it is being forced under US sanctions to distance form Iran when it comes to oil, according to a report by Iraq House Institute for Strategic Studies.

The United States announced late in April that it will not prolong a waiver for Iranian oil buyers, and that they should await sanctions if continue importing oil from Iran while Tehran is Sanctioned.

Turkey, is among the countries that is now struggling to find a solution as it is heavily dependent on Iranian oil. The report argues that Ankara is looking for an alternative now, but it may not find a better solution than approaching Kurdistan Region.

Technically, Turkish state-owned refineries are all managed by Tüpraş. They are designed to suit heavy oil such as Iranian crude. If Turkey is forced to purchase a different type of crude, then it will need to adjust the liquidation process which requires an additional cost.

A suitable substitute to Iranian oil for Turkey is the Russia’s heavy Ural oil or Kurdistan's heavy and medium oil. The former is geographically farther from Turkey and costly. Remains the oil from Kurdistan Region, which is possibly the best option, as the report points out.

After 2014 and following Baghdad’s new measures to cut Kurdistan Region’s share from the federal budget, and while the Kurds were leading a costly war against the Islamic State, Erbil began exporting oil to the international market via Turkey’s Ceyhan port. Additionally, there is a pipeline that connects oil-rich Kirkuk province to Turkey.

Despite the fact that the Turkey, at the wake of political tensions, did not purchase Kurdistan Region’s oil itself, it, however, allowed the flow to continue via its ports. Now, that the political tensions between Ankara and Erbil are easing, and while Turkey is in need of an alternative to Iranian oil, the crude from Kurdistan Region and Kirkuk could be purchased and used by Turkey itself.

On the other hand, Erbil-Baghdad relations are reviving fast in the past few months. They sides said they are eagerly working on a roadmap that could resolve their disputes pertaining to oil and budget. Therefore, the Iraqi central government, also, can take into consideration an increase to its oil production in Kirkuk and export it via Kurdistan Region’s pipeline to Turkey.