Kirkuk pipeline attack sets Iraq oil back

WASHINGTON, Sept. 18 (UPI) -- The international oil market will still have to rely on Basra to supply Iraq’s oil exports as an apparent attack shuts down the Kirkuk-Ceyhan pipeline again.

The pipeline is key to increasing Iraq exports, providing the capacity to increased production. The Bush administration, during benchmark stump speeches last week, held up the newly reopened pipeline as a success story.

Iraq produced just less than 2 million barrels per day last month, according to estimates by the global energy information firm Platts. The country usually exports slightly more than three-fourths of what it produces. Most of that is coming from export terminals in Basra, in south Iraq, since attacks on the pipeline feeding oil to a terminal in Ceyhan, Turkey, has rendered it virtually useless.

Media reports are quoting sources on the ground that a pre-dawn bomb ripped open the pipeline between Kirkuk and Baiji, sending oil into the Tigris River, forcing water pumps in Tikrit and Baiji to shut down and threatening the supply into Baghdad.

Last month Iraq officials gave a hushed admission that the line had been repaired and oil was flowing to Turkey, most likely in test quantities, said Rochdi Younsi, Middle East analyst for the business risk firm Eurasia Group.

“They did say that they were completing a series of tests that appear to be promising, tests meaning that they were pumping a certain volume through the pipeline,” Younsi said. “But frankly no one expected the Iraqi government to make an announcement because doing that usually leads to an attack.”

Iraq recently announced an Oct. 5 tender for shipments of oil from Ceyhan, a move that comes after enough oil had been shipped to storage tanks there.

“Yesterday a report came out saying basically that exports of oil through the Kirkuk-Ceyhan pipeline had been abruptly interrupted for the past six days, which basically implies that it was working before that,” Younsi said. “And then this morning we heard about the explosions.”

Younsi said it is an added dynamic in the power struggle in Iraq. Kurds in the relatively safe and semi-autonomous northern region will be “growing impatient with the deterioration of security in that area,” which the federal government controls.

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Ben Lando, UPI Energy Editor