Oil production in Iraqi Kurdistan is threatened after Turkey halted exports through a pipeline

Oil production in the semi-autonomous Kurdistan Region of Iraq is under threat after the halt in exports from the northern region forced companies operating there to pump crude to storage facilities with limited capacity.

Iraq was forced to stop about 450,000 barrels per day of crude exports from the Kurdistan region of Iraq on Saturday, through an export pipeline extending from oil fields in Kirkuk in the north of the country to the Turkish port of Ceyhan.

Turkey stopped pumping Iraqi crude oil from the pipeline after Iraq won an arbitration case in which it said Turkey had violated a joint agreement by allowing the Kurdistan Regional Government to export oil to the port of Ceyhan without Baghdad’s approval.

Oil companies operating in the region have been left in limbo pending the outcome of ongoing discussions between Ankara, Baghdad and the KRG to find a way to resume exports.

Gulf Keystone Petroleum, which operates the Sheikhan field with a production capacity of 55,000 barrels per day in the Kurdistan region of Iraq, said in a statement on Monday that “its facilities have storage capacity that allows production to continue at a reduced rate over the coming days, after which the company will stop production.”

DNO and Genel Energy, which also operate in the region, said they are currently storing oil in warehouses that can hold several days’ production.