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Iraq gives preliminary nod to resume pipeline exports,

sources

say

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Deal could add 230,000 barrels per day of fresh oil

supplies

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Kirkuk-Ceyhan pipeline has been shut since March 2023

By Nerijus Adomaitis and Ahmed Rasheed

BAGHDAD, Sept 19 (Reuters) - Iraq, OPEC's second-largest

producer, has given preliminary approval to a plan to resume

pipeline oil exports from its semi-autonomous Kurdistan region

through Turkey following delays to a hoped-for restart, sources

familiar with the talks told Reuters.

The deal between Iraq's federal government, the Kurdistan

Regional Government and international oil companies could add at

least 230,000 barrels per day of fresh supplies at a time OPEC

producers are raising output to regain market share.

Iraq exports around 3.4 million barrels of oil per day from

its southern ports, but the Kirkuk-Ceyhan pipeline in the north

has been shut since March 2023 after an arbitration court ruled

that Turkey should pay $1.5 billion in damages for unauthorised

exports between 2014 and 2018. Turkey is appealing the ruling.

Ankara has since said it is willing to restart exports, but

the flows remain suspended because of ongoing legal and

political disputes between Baghdad, the Kurdistan Regional

Government in Erbil, and the international oil companies.

Iraq's cabinet has given preliminary approval to a plan to

resume exports, and international oil companies operating in

Kurdistan have also tentatively agreed, two sources familiar

with the talks said.

APIKUR, a group representing firms including Genel Energy ( GEGYF )

, DNO and Gulf Keystone, declined to

comment, citing ongoing negotiations.

"Discussions have intensified and we're closer to a

tripartite agreement... than we've ever been, as all are showing

flexibility," an executive from one of the international oil

companies said.

Under the preliminary plan, the KRG would commit to

delivering at least 230,000 bpd to Iraq's state oil marketer

SOMO, while keeping additional 50,000 bpd for local use.

An independent trader would handle sales from Ceyhan using

SOMO's official prices.

For each barrel sold, $16 would be transferred to an escrow

account and distributed proportionally to producers. The

remainder of the revenue would go to SOMO.

The draft plan also does not specify how or when producers

will receive about $1 billion in unpaid arrears, accumulated

between September 2022 and March 2023.

Luke Clements, CFO of Genel Energy ( GEGYF ), told a conference in

Oslo last week that there had been significant progress made in

drafting agreements to restart pipeline exports.

"But it still needs to get over the line," he added.