Sabotage costs Kurdistan Region $501 mln

Oil theft and pipeline attacks have cost the Kurdistan Region of Iraq $501 million between July 1 and August 17, the government’s Ministry of Natural Resources said on Tuesday. The incidents concern the Kirkuk-Ceyhan pipeline, which is connected to the region’s oil-producing fields through a spur line completed in December 2013 and runs to Turkey’s southern port of Ceyhan.

Oil is currently at a standstill in the pipeline due to a theft attempt blamed on what the ministry call “organised gangs,” which some consider is a shielded reference to the Kurdistan Workers’ Party, better known as the PKK. The militant group also claimed responsibility for an attack on the pipeline in late July, which caused a week-long shutdown. The latter incident cost the region $250 million, according to the ministry, while overall the government has experienced another $251 million in lost revenue for the seven-week period.

The pipeline attack was seen as retaliation for Turkey’s bombing of PKK camps in northern Iraq amid a period of escalating tensions between the two sides. While the PKK and the Kurdistan Region are seen as natural allies, the latter’s energy ties with Turkey are one major point of conflicting interest.

The losses exacerbate the fiscal woes of the Kurdistan Region’s government, which is already facing a budget shortfall due to low oil prices while engaged in a military campaign against the Islamic State militants. The ministry said disruptions to the pipeline could affect its ability to pay civil servants’ salaries for June and jeopardise ongoing military operations.

The ministry has called on Turkey’s state-run pipeline company BOTAS to do more to protect the pipeline. Turkey’s losses in transit fees when oil stops flowing are relatively minor compared to those accrued by the Kurdistan Region. Throughput for the Kirkuk-Ceyhan pipeline is normally around 400,000 barrels per day, but due to attacks is down to 300,000 barrels. The capacity of the pipeline is 1.6 million barrels per day.