Sweeping energy agenda and construction frenzy mark bumpy Turkish economy in 2014

Deals regarding Iraqi oil were some of the most significant developments in the last year for Turkey's economy.

The government of Iraq and the Kurdish Regional Government (KRG) region began implementing a deal in November under which Baghdad resumed funding for Kurdish civil servant salaries in return for a share of Kurdish oil exports. The deal aims to reduce friction between Baghdad and Kurdish authorities as they face a common threat from Islamic State in Iraq and the Levant (ISIL) insurgents who have seized large parts of the north and west of the country.

Under the agreement reached, Kurdish authorities committed to pumping 150,000 barrels per day of oil, around half their overall shipments, to Iraqi government export tanks in the Turkish port of Ceyhan.
Baghdad agreed to pay $500 million toward Kurdish salaries.

The KRG began pumping oil to State Oil Marketing Organization (SOMO) tanks at Ceyhan. Turkey and the KRG signed a multi-billion-dollar energy package in November that will help transform the semi-autonomous region into an oil and gas powerhouse but infuriate the central government in Baghdad. 

Iraq plans to boost its crude production to 4 million barrels a day (bpd) next year, Reuters reported. KRG Energy Minister Ashti Hawrami told a conference in London on Dec. 17, 2014, that the pipeline to Turkey could carry 800,000 bpd next year, including 550,000 bpd to be marketed by Baghdad under a first-stage deal reached earlier this month. 

Turkey is subsequently expected to make new deals with new companies, which will be of great importance to Iraqi oil, Energy Minister Taner Yıldız said at the launch meeting of the World Energy Outlook 2014 report of the International Energy Agency (IEA) on Dec. 21.