Turkey plans new gas, crude export pipelines to Iraq through Ceyhan

Turkey has proposed new pipelines that would carry oil and natural gas from Iraq's resource-rich Basrah region to the Mediterranean port of Ceyhan, a move that would allow Baghdad to get more of its crude to market while furthering Ankara's plans to transform itself into a major regional energy hub.

The plans, revealed to S&P Global Commodity Inisghts by Turkish energy minister Alparslan Bayraktar in an interview, are an extension of the ambitious Development Road project, which aims to connect Asia with Europe via a network of railways and roads through Iraq.

From Basrah, goods, gas, and crude would travel north to Haditha before making their way to Silopi in southern Turkey, all while largely skirting Iraq's semiautonomous Kurdistan region in the north.

Turkey's international pipeline projects are designed to ensure energy security, diversify sources, and strengthen energy diplomacy, said Eser Ozdil, a non-resident fellow at the Atlantic Council.

"Although the Sakarya Gas field has entered production in recent years and expected that production in the Gabar oil field will increase to 100,000 barrels per day levels, Turkey will continue to be heavily dependent on imports in the coming years," Ozdil said.

Bayraktar said that a "principal agreement" has been reached between Turkey and Iraq for the pipelines, as well as an additional electricity transmission line, and he believes they can finalize the studies "soon" and "enter into an energy framework agreement with Iraq in the upcoming months."

Already, an operational pipeline runs from Silopi to Ceyhan, but "without connecting the Basrah fields, we cannot reach 1.5 million b/d throughput in the Silopi–Ceyhan Pipeline," Bayraktar said.

The proposed route would link up with the 2.25 million b/d planned pipeline between Basrah and Haditha that was greenlit by the Iraqi government in January. Adversaries feared it would reignite plans to construct a controversial pipeline through Jordan.

But Turkey has a different route in mind.

"Basra–Silopi expansion is quite important for Iraq for sustainable crude oil export [that would give Iraq] an alternative route and easy access to the Mediterranean markets," Bayraktar said.

The Iraqi prime minister's office did not respond to a request for comment.

This route also requires energy to travel from Baiji, Iraq, to Fishkabur, a Kurdish city on Iraq's border with Turkey, with the existing pipeline badly damaged by Islamic State militants. Commodity Insights research shows that section has been repaired, though it is not yet operational.

But Baghdad and Ankara may first need to resolve a simmering dispute over an already existing pipeline between the two countries. Negotiations to reopen the Iraq-Turkey pipeline that has been shut for over two years continue, and recently tensions flared when it was discovered that Turkish crude had flowed through the pipeline. The Iraqi oil ministry vowed it would take action soon against the move it says violated the pipeline agreement.

Bayraktar told Platts, part of Commodity Insights, that prior to the discovery of Turkish crude in the pipeline, the pipeline dispute is an Iraqi "internal matter" and Ankara "is not involved and has no intention to involve the discussions concerning the resuming crude oil flow." He said resolving the dispute is not a prerequisite for new pipelines.

Gas plans

On the gas front, Bayraktar said Turkey's gas transmission system runs to the Iraqi border and could deliver up to 5 Bcm of gas bidirectionally.

"A gas pipeline from Basrah to Silopi will benefit the region," he said. "In the short term, until the natural gas fields in Iraq are developed, we plan to supply natural gas to Iraq for electricity generation."

Commodity Insights data show a planned gas pipeline from Silopi to Ceyhan.

He said that in the longer term, Iraq would supply gas to Turkey and other countries via Turkey. Ankara would likely collect a fee for any gas or crude transported through pipelines in its territory, which could be a substantial income for the country whose economy has struggled for years. With the Iraq-Turkey pipeline closed, it's possible Turkey has lost up to $1 billion in transit fees, according to oil company sources and calculations done by Platts. The new pipelines would likely help pad Ankara's coffers.

Iraq has substantial gas reserves, but currently its focus is on meeting domestic demand through increased efforts to capture massive amounts of flared gas, with an eye to end the practice by 2028. Iraq in 2023 flared nearly the same amount of gas it consumed domestically in the same year.

It's unclear how Turkey's plans for Iraqi gas exports via the proposed pipeline could work with the country's self-sufficiency goals.

Iraq's needs

Alongside the pipelines, Turkey also announced it would seek to double the amount of electricity it sends to Iraq, as well as lay an additional electricity transmission line between the countries.

Bayraktar visited Iraq in mid-March following the sudden halt of longstanding US sanctions waivers that allowed Iraq to import electricity from Iran, which totaled about 3% of Iraq's electricity generation.

Still in question is the fate of Iranian gas imports, which make up a much larger share of Iraq's power generation capacity at around 30%. Iraq has been on the hunt for new supplies should US President Donald Trump continue to clamp down on Iran via his "maximum pressure" campaign, which has caught Iraq in its crosshairs.

Development Road

Amid the turmoil, Turkey, having pledged $17.9 billion to the Development Road project, has eyed an opportunity to progress its own goals while increasing electricity and energy supply to Iraq.

"We proposed to our Iraqi counterparts the idea that we should extend this project with crude oil, natural gas, and electricity lines," Bayraktar told Platts.

The broader Development Road project, however, has come under criticism as it bypasses Kurdistan in northern Iraq.

"We are doing all our best so [the Road] crosses Kurdistan as well," a Kurdistan government spokesperson told Platts. He said including the Kurdish region would lower the costs and save time, adding there seemed to be "no incentive" for the project to bypass Kurdistan.

While backed by international cohorts, including Qatar and the UAE, local groups have proven formidable foes of unpopular infrastructure projects, with Kurdish PKK and PMF militants sabotaging pipelines and oil and gas fields.

The 740-mile development road's focal point and southern terminal is Iraq's Grand Faw Port, which is planned to be complete in 2028 and will be one of the world's largest ports. Iran-aligned groups are notorious for their presence in southern Iraq and have meddled in the port's development so far.

"Geopolitical developments and the economic bottleneck that Iraq is in are the most important risk factors in the proposed projects," Atlantic Council's Ozdil said. "However, I think that the projects mentioned can be implemented if there is political and financial support from parties, especially from Turkey, Iraq, Qatar, UAE, the World Bank, and the European Union."