Turkey says Iraq was ordered to pay compensation to Ankara in arbitration case

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Turkey’s Energy Ministry said on Tuesday that Iraq had been ordered by the International Chamber of Commerce (ICC) to pay compensation to Ankara in a longstanding arbitration case related to oil exports from northern Iraq via Turkey, Reuters reported.

The Turkish energy ministry statement was released after Iraq’s oil ministry said on Saturday the ICC had ruled in its favor in the case. The Turkish statement said the ICC had recognized a majority of Turkey’s demands, without saying how much compensation Iraq had been ordered to pay.

The case relates to Iraq’s claim that Turkey violated a joint agreement by allowing the Kurdistan Regional Government (KRG) to export oil through a pipeline to the Turkish port of Ceyhan in 2014.

Baghdad deems KRG exports via the Ceyhan port to be illegal.

The ICC ruled in favor of Iraq on Thursday in the arbitration case and ordered Turkey to pay Iraq damages relating to the transport of KRG oil through the export pipeline and the discount at which KRG oil was sold, a source familiar with the case told Reuters.

But Turkey won a counter-claim for Iraq to pay a pipeline throughput fee, the source said.

The net amount that Turkey owes Iraq was around $1.5 billion before interest, Reuters reported on Saturday.

Iraq on Saturday halted crude exports of 450,000 barrels per day (bpd) from the semi-autonomous Kurdistan region and northern Kirkuk.

In its first official statement on the issue, the Turkish energy ministry said the ICC overruled four out of five demands from Iraq.

“[The ICC] ordered Iraq to pay compensation to Turkey,” the ministry said, without revealing the amount of compensation.

Around 450,000 barrels per day (bpd) of crude exports, or half a percent of global oil supply, to Turkey from the semi-autonomous Kurdistan region and northern Kirkuk fields were halted following the verdict.

“This case is in fact a reflection of disagreement between Iraq’s central government and Iraq’s Kurdish Regional Administration,” the Turkish ministry said.

“Turkey is ready to fulfil the requirements of international law, and to contribute to finding a permanent solution between parties of disagreement,” it added.

Oil firms in the region have been left in limbo, with production in the Kurdistan region at risk, as the pipeline stoppage is set to continue until Ankara, Baghdad and the KRG reach a settlement to resume exports.

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