Kurdish oil goes to storage after court ruling against Turkish exports

March 27 (UPI) -- Norwegian energy company DNO said Monday it was ordered to stop sending oil from the Kurdish region of Iraq to a Turkish pipeline following an international court order against the government in Ankara.

DNO said it was instructed by the semi-autonomous Kurdistan Regional Government to stop deliveries to the Iraq-Turkey pipeline for exports from the Turkish port of Ceyhan.

The order followed "an arbitration ruling in favor of Iraq against Turkey and its state-owned pipeline operator BOTAS for transporting Kurdish oil without prior approval from Baghdad," the company explained.

DNO said it started sending oil to storage tanks that can hold "several" day's worth of production from Kurdish oil fields. Its pipeline has the capacity to carry around 500,000 barrels of oil per day, with most of that in the form of Kurdish oil.

Genel Energy, another company with operations in the Kurdish north of Iraq, said it was also sending crude oil to storage, but said it expected the pipeline closure would be temporary. The London-based company pointed to a draft budget approved by the Cabinet in Baghdad that allows for ongoing exports of Kurdish oil.

The central government in Baghdad and the KRG have been at loggerheads for years. Iraq's central government in 2014 filed a case at the International Chamber of Commerce in 2014, arguing Turkey was in violation of a 1973 bilateral agreement by allowing the KRG to send oil through the pipeline without Baghdad's consent.

The Kurdish government said last week the decision does not impact the relationship between the two governments, though a delegation would travel to Baghdad to discuss the issue further.

Iraq is the second-largest oil producer among members of the Organization of the Petroleum Exporting Countries with production averaging around 4 million bpd.

DNO stressed that formal details about the ruling in Baghdad's favor have not been released.