Argus

Forza Petroleum was shutting in production from oil fields in the Hawler license area in the semi-autonomous Kurdistan region of northern Iraq, after pipeline exports of Iraqi Kurdish oil to the Turkish Mediterranean port of Ceyhan were halted over the weekend.

Canadian-based Forza is the first foreign operator to announce a halt in production in the areas controlled by the Kurdistan Regional Government (KRG). Ceyhan-bound deliveries via pipeline were halted after the International Chamber of Commerce (ICC) in Paris had ruled in favor of Iraq in a case that pitted Baghdad against Ankara. Iraq has challenged Turkey's authorization for KRG to export crude through the Kirkuk-Ceyhan pipeline without Baghdad's consent.

Foreign oil firms operating in the Kurdistan region have been diverting their crude output into storage tanks following the pipeline shut-in.

"With Hawler storage nearing full capacity, production from the Hawler license area is being shut in pending the resumption of deliveries from the license area," Forza said today.

Another operator of KRG-based oil fields, HKN Energy, said today that its storage facilities were approaching capacity and that it would shut down production within a week unless the Kirkuk-Ceyhan pipeline resumes operations.

"We have urged the governments of Turkey and Iraq to resume the flow of oil through the Iraq Turkey pipeline," the US State Department said today. "Disruptions to global energy supply would not serve anyone's interest."

Crude exports from northern Iraq, Kirkuk blend, averaged 452,000 b/d last year, according to Argus tracking data. More than 380,000 b/d of this was marketed by the KRG. Iraq's federal oil marketing firm Somo accounted for the rest, all of which all went to Turkish refiner Tupras.