Iraqi Kurdistan faces first major oil outage since referendum

LONDON/BAGHDAD - 18 October 2017: Iraq's Kurdistan's oil exports more than halved on Wednesday in the first major supply disruption since the independence referendum last month as Iraqi military retook some of the biggest fields from Kurdistan's Peshmerga forces.

Kurdish oil exports from the Mediterranean port of Ceyhan have dropped to just 225,000 barrels per day on Wednesday compared to normal flows of 600,000 bpd with both Kurdish and Iraqi sources citing technical glitches in the Kirkuk area.

The area came under the control of Iraqi military on Tuesday for the first time since 2015, effectively halving the amount of production under Erbil's direct control.

Two Iraqi oil officials said operations were halted at six pumping stations at the Avana and Bai Hassan oilfields, taking out about 350,000 bpd of production.

One official said normal operations were due to resume in the next 24 hours.

Iraqi Prime Minister Haider al-Abadi ordered the advance on the two fields in the wake of the independence referendum by the semi-autonomous Kurdish region last month.

Turkey has several times threatened to halt flows through the Kurdish pipeline because of the referendum. Baghdad also depends on the pipeline for some exports as its own pipeline has been down for several years.

The crude flows to the international market via the Mediterranean Turkish port of Ceyhan. The main lifters of the oil are trading houses Vitol, Petraco, Glencore and most recently Russia's Rosneft via prefinancing deals.

The head of trading house Vitol said on Wednesday he hoped infrastructure would be protected in the latest spike in tensions although exports could still drop in the weeks to come.