Republic of Iraq Commences Arbitration against Republic of Turkey and BOTAŞ for Violations of the Iraq-Turkey Pipeline Agreement

abarrelfullabarrelfull wrote on 29 May 2014 08:08
Tags: iraq m-east pipeline turkey

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The Ministry of Oil of the Republic of Iraq announced today that it has filed a Request for Arbitration against the Republic of Turkey and its state-owned pipeline operator BOTAŞ, seeking to stop the unauthorized transportation, storage and loading of crude oil pumped into the Iraq-Turkey pipeline by the Kurdistan Regional Government. The Request for Arbitration was filed today with the International Chamber of Commerce (ICC) in Paris in accordance with the agreements that govern the pipeline and related facilities.

By transporting and storing crude oil from Kurdistan, and by loading that crude oil onto a tanker in Ceyhan, all without the authorization of the Iraqi Ministry of Oil, Turkey and BOTAŞ have breached their obligations under the Iraq-Turkey Pipeline Agreement.

This agreement governs the operation of two pipelines that run from Kirkuk, Iraq, to the Turkish port of Ceyhan on the Mediterranean Sea, as well as crude oil storage and loading facilities at Ceyhan. It was signed in 1973 and amended several times, most recently in 2010. Under the agreement, Turkey and BOTAŞ committed to reserve the entire pipeline, storage and loading system for the exclusive use of the Iraqi Ministry of Oil, and to handle and load crude oil coming from Iraq exclusively in accordance with instructions given by the Iraqi Ministry of Oil.

In November 2013, Turkey announced the signature of a series of energy cooperation agreements with the Kurdistan Regional Government, and stated its intention to begin transporting Kurdistan crude oil through one of the pipelines. The Iraqi Government immediately protested that this was a violation of the pipeline agreement.

Despite these protests, in late December Turkey and BOTAŞ began transporting crude oil from Kurdistan without authorization from the Iraqi Ministry of Oil. Requests by the Iraqi side to engage in discussions to resolve the dispute were met with no constructive response, leaving the Iraqi side with no choice but to commence arbitration in order to stop the violations.

On 21 May 2014, BOTAŞ began loading a cargo of crude oil onto a tanker at Ceyhan. BOTAŞ representatives have said that they were acting on the instructions of the Turkish Government. Representatives of the Ministry of Oil immediately protested, but BOTAŞ continued to load the tanker. Turkey and BOTAŞ have therefore facilitated the illegal sale of crude oil that rightfully belongs to the people of Iraq.

The actions by Turkey and BOTAŞ also violate a Mutual Friendship Treaty that the Republic of Iraq and the Republic of Turkey signed in 1946. This treaty requires Turkey to observe a strict policy of non-interference in Iraqi domestic affairs. Turkey’s unauthorized actions directly impact important Iraqi domestic issues relating to the extraction, export and sale of oil, and therefore interfere in the domestic affairs of Iraq.

In the Request for Arbitration, the Republic of Iraq has asked an ICC arbitral tribunal to order Turkey and BOTAŞ to cease all unauthorized transport, storage and loading of crude oil through the pipeline and related facilities. The Republic of Iraq is also seeking other relief, including financial damages that are currently estimated at more than US$250 million.

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