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Kurdistan Plans Oil Pipeline to Turkey

Source: Reuters 2/7/2013, Location: Middle East

Iraqi Kurdistan will press ahead with building its own oil export pipeline to Turkey, the region's energy minister said, despite U.S. objections due to fears the project could lead to the break-up of Iraq.

The autonomous Kurdish region is locked in a turf war with the central government in Baghdad over how to exploit Iraq's hydrocarbon riches and divide up the proceeds.

Baghdad says it alone has the authority to control exports of the world's fourth largest oil reserves, while the Kurds say their right to do so is enshrined in Iraq's federal constitution, drawn up following the U.S.-led invasion of 2003.

"We want to have an oil pipeline to ourselves," Iraqi Kurdish Minister for Natural Resources Ashti Hawrami said at a news conference in the regional capital Arbil. "It is currently in the works and we will continue until it is completed."

Crude from the Kurdistan region used to be shipped to world markets through a Baghdad-controlled pipeline to Turkey, but exports via that channel dried up in December 2012, from a peak of around 200,000 barrels per day (bpd) due to a row over payments with Baghdad.

The United States says the solution lies in a national hydrocarbons law that has been delayed for years by a power struggle between Iraq's Sunni, Shi'ite and Kurdish factions, which has intensified since U.S. troops withdrew a year ago.

"The Iraqis have been struggling to pass a hydrocarbons law. It is very important that they succeed in that," U.S. Ambassador to Turkey Francis J. Ricciardone said in Ankara.

Reluctant to wait, Kurdistan has been looking to resource-hungry Turkey for answers. A broad energy partnership between them ranging from exploration to export has been in the works since 2012.

Majority Sunni Turkey's deepening ties with the Kurdistan region in northern Iraq have heightened tensions between Ankara and the Shi'ite-led government in Baghdad.

"If Turkey and Iraq fail to optimize their economic relations... There could be more violent conflict in Iraq and the forces of disintegration within Iraq could be emboldened," Riccardione said.

Kurdistan is already bypassing the federal pipeline network by trucking small quantities of crude over the Turkish border in exchange for refined oil products.

"The issue is that we are entitled to 17 percent of (Iraq's) refined products, but the central government sends us only 3 percent and our refining capacity is not enough to satisfy domestic demand," Hawrami said.

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