Iran, Iraq Sign Oil Swap Agreement

Iraqi Oil Minister Jabar al-Luaibi said on Sunday a deal signed with Tehran to swap up to 60,000 barrels per day of crude produced from northern Iraq's Kirkuk Oilfield for Iranian oil is for one year and subject to renewal.

The agreement signed on Friday by the two OPEC countries provides for Iran to deliver to Iraq’s southern ports, on the Persian Gulf, “oil of the same characteristics and in the same quantities” as those it would receive from Kirkuk, Reuters reported.

“This is an agreement for one year and then we will see after that whether to renew it,” Luaibi told reporters in Kuwait City on the sidelines of an Arab oil ministerial meeting.

The deal in effect allows Iraq to resume sales of Kirkuk crude, which had been halted since Iraqi forces took back control of the fields from the Kurds in October.

Between 30,000 and 60,000 bpd of Kirkuk crude will be delivered by tanker trucks to the border area of Kermanshah, where Iran has a refinery.

Luaibi also said the construction of an oil pipeline from Kirkuk to the Turkish Ceyhan Port will take one year to build.

It will replace an old, badly damaged section of the Kirkuk-Ceyhan pipeline. It will start from the nearby city of Baiji and run up to the Fish-Khabur border area with Turkey.

The territory that the Kirkuk-Ceyhan pipeline ran through was captured by the self-styled Islamic State terrorist group in 2014 and then recaptured by US-backed Iraqi forces over the past two years.

The minister said he plans to visit Kirkuk Oilfield on Thursday with a senior executive from BP to “activate” an agreement signed with the British oil company to help Baghdad halt a huge decline in output from Kirkuk and increase production to higher levels.

“We have a memorandum of understanding with BP to evaluate Kirkuk Oilfield to raise output and enhance it reservoirs,” Luaibi said.

Iraq has asked BP to help increase output from Kirkuk to more than 700,000 barrels per day.

Kirkuk is one of the biggest and oldest oilfields in the Middle East, still estimated to contain around 9 billion barrels of recoverable oil, according to BP.

BP has provided technical assistance in the past to the Iraqi state-owned North Oil Company to aid the redevelopment of the Kirkuk field.