Crude oil has started flowing from Iraqi Kurdistan to Turkey but will not be exported worldwide without the Iraqi central government’s permission.
Taner Yildiz, Turkish energy minister, said on Thursday that the oil would be kept in storage at the country’s Ceyhan export hub and that he hoped that Ankara would reach a deal with Baghdad before the end of January.
“The flow of crude oil from Iraq has begun. It is being stored. It will not be exported without the consent of the Iraqi government,” Yildiz said.
Iraq’s central government has been angered by energy deals between Turkey and Iraqi Kurdistan because it claims it alone has the authority to manage Iraqi oil.
It says Kurdish efforts towards oil independence could lead to the break-up of the country.
Thursday’s oil flow started weeks after Turkish assurances that oil exports from anywhere in Iraq needed Baghdad’s approval.
However, sources close to the deal said that Turkey signed a multi-billion-dollar energy package with Iraqi Kurdistan in November that would help transform the Iraqi region into an oil and gas powerhouse.
Turkey says Iraqi Kurdistan’s resources will help diversify its energy supplies and reduce its ballooning $60bn annual energy bill.