Iraqi Kurdistan oil export talks end without deal despite US push

Talks on resuming Iraqi oil flows to Turkey that have been halted for two years failed on Thursday for the second time in a week, two official sources with knowledge of the matter said.

The two-year stand-off has halted flows from Iraqi Kurdistan in the north of the country to Turkey’s Mediterranean port of Ceyhan.

An official from the US embassy in Baghdad attended the talks for the first time, which were held at the Iraqi oil ministry’s headquarters in the city, four sources said.

Washington is applying pressure to Iraq to resume the exports last month that US President Donald Trump’s administration had asked Iraq to allow the flows to restart or face sanctions.

The US administration’s stance in part reflects its “maximum pressure” campaign on neighboring Iran which includes efforts to squeeze off Tehran’s oil exports.

The main sticking point at Thursday’s meeting was over pricing, one of the two official sources said.

Talks on Sunday had also ended without a breakthrough.

On Thursday the ministry insisted on a production cost of $16 per barrel for exported volumes of around 185,000 barrels per day (bpd), but would not apply that price to all production from Iraqi Kurdistan, one of the sources said, adding that the foreign oil firms involved strongly rejected this.

Oil producers working in Kurdistan include DNO, Genel Energy, Gulf Keystone Petroleum and Shamaran Petroleum.

Another source with knowledge of the matter told Reuters that Baghdad had earlier promised that the price would apply to all production but had backtracked at the Sunday meeting with oil firms.

US official

The US official attended Thursday’s talks at the request of Washington, an Iraqi oil ministry official with direct knowledge of the matter said.

“The presence of the US diplomat aims to help push the negotiations forward and reach solutions to the issues hindering the resumption of oil exports in a way that satisfies all parties,” the official said.

“There is strong insistence from the US side on ensuring the success of the negotiations by any means,” said a government official close to the talks.

The White House National Security Office did not respond to a request for comment.

Washington wants the flows via Turkey restarted partly to boost global supply and therefore help lower prices. At the same time the US administration wants to halt financial ties between Iraq and neighboring Iran as it applies pressure on Tehran over its oil exports and nuclear program.

Iraq is an important ally to the United States and Iran and vital to helping the latter support its economy amid international sanctions.

Baghdad is wary of getting caught in the crosshairs of the US president’s policy of squeezing Tehran, sources have said.