Iraq to sign extension of pipeline deal with Turkey

Iraq is set to sign a one-year extension of its crude oil pipeline deal with Turkey to continue exporting oil. The Opec member nation is actively seeking alternative export routes due to the closure of the Strait of Hormuz, a result of the ongoing US-Iran conflict. Iraqi Oil Minister Bassem Khudair will be traveling to Turkey on Saturday to finalize the agreement, which will provide an export capacity of 750,000 barrels per day.

This development follows the expiration of a long-standing bilateral agreement on Monday. The agreement involves Iraq's State Oil Marketing Company, North Oil Company, and Turkey's BOTAS. It is seen as a precursor to a broader deal aimed at increasing export capacity to over one million barrels per day, once the Basra-Haditha-Kirkuk-Ceyhan pipeline is completed.

The conflict has caused a significant decline in Iraq's oil output, plummeting by 66% from 4.3 million bpd to 1.4 million bpd in May. Furthermore, production through the Ceyhan pipeline has dropped from 3.5 million bpd to approximately 200,000 bpd. In May, Iraq announced the commencement of work on a new pipeline from Basra to Haditha, with a capacity of 2.5 million bpd, as part of its efforts to identify alternative export routes.

The $1.5 billion project is contingent on additional budget allocations for its completion. Additionally, Iraq's cabinet recently approved plans to revive the construction of a new pipeline through Syria to the Mediterranean, aiming to diversify export routes and enhance production.