Baghdad: Economic Expert Raad Twaij has raised concerns over the potential economic challenges that Iraq may face following the termination of the Iraq-Turkey oil pipeline contract. Twaij emphasized the necessity for Iraq to explore alternative routes to Turkey at a lower cost to mitigate the impact of the pipeline’s suspension.

According to National Iraqi News Agency, Twaij highlighted that the suspension of the pipeline transporting Iraqi oil through Turkish territory, expected next year, could coincide with new developments or obligations in any forthcoming agreement. He noted Turkey’s strategic emphasis on maximizing profits from the pipeline by proposing higher tariffs for oil transported to the Turkish port of Ceyhan, which may alter the dynamics of the longstanding arrangement.

Twaij urged Iraqi negotiators to proactively seek favorable transportation costs, as Turkey has proposed increasing the fee per barrel to $2.50. He also recommended maximizing oil transport through the pipeline to reduce per-barrel costs and utilizing an accompanying pipeline to export gas from northern Iraq to Europe via Turkey. Additionally, he suggested leveraging Turkish investment opportunities and proposing partnerships in petrochemicals and hydrocarbon production.

Last week, Ankara announced that it would terminate the oil pipeline agreements with Iraq, effective July 2026. This decision, published in the Turkish Official Gazette, signals a potential shift in the Kirkuk-Ceyhan pipeline’s role, which has been a crucial conduit for Iraqi oil exports to the Mediterranean for years.

The termination announcement has sparked questions regarding its political and economic ramifications, posing significant challenges for Iraq as it seeks strategic alternatives. The Kirkuk-Ceyhan pipeline, a principal oil export route, has facilitated the transportation of crude oil from northern Iraq’s fields, including those in the Kurdistan Region and Kirkuk, to Ceyhan on the Mediterranean.

The original agreement between Iraq and Turkey, signed on August 27, 1973, and operational since 1977, was intended to allow Iraq to export oil to global markets via the Mediterranean, circumventing the Strait of Hormuz.