Turkey: What Iraq's Pipeline Plans Might Cost Turkey

What happened: Iraq's cabinet authorized preliminary agreements to study two oil export pipeline routes from southern Iraq: one to Turkey's Ceyhan and one to Syria's Baniyas. Turkey and Iraq agreed to temporarily extend their pipeline treaty, with long-term talks to follow.

Why it matters: Turkey retains near-term leverage over Iraqi exports, but Baghdad is steadily building alternatives. Most bypass the Kurdistan Region of Iraq (KRI) rather than Turkey, while the Baniyas option bypasses Turkey altogether.

What happens next: With an interim arrangement in place, the strategic question is whether future southern Iraqi crude ultimately flows through Turkey or Syria. More likely, we expect exports to pass through both.

On 5 July, Iraq's cabinet cleared the Basra Oil Company to sign a heads-of-agreement and non-disclosure agreement with US and Qatari companies to study two potential oil pipeline routes from Basra via Haditha: one running north to Ceyhan and one running west to Syria's Baniyas. A separate contract, awarded last week to KBR, covers studies for the Basra-Haditha segment, the $4.6bn reversible trunk line that both routes would share. Baghdad is deliberately keeping every option alive and pointedly not committing to Turkey.

The timing is not incidental. The 1973 Iraq-Turkey pipeline treaty, last amended in 2010, will expire on 27 July. The pipeline was shut for 2.5 years following a 2023 arbitration award, and since September has operated at around 180,000 bpd — a fraction of its nameplate capacity. Ankara triggered termination a year ago and has since rejected Baghdad's request for a simple extension, pushing instead for a new framework with higher tariffs and firmer volume commitments.

Iraqi and Kurdish officials visited Ankara last week for talks with Energy Minister Alparslan Bayraktar, who in turn visited Baghdad yesterday. The outcome of the talks is an interim protocol, due to be signed next week, that will prolong the current flow for another year to buy time for the larger negotiation. With the Hormuz crisis having shut Baghdad’s most reliable export outlet, Bayraktar is confident that he holds greater leverage in the near term and can extract better terms. He will expect to negotiate from a position of strength when Iraq’s new premier, Ali al-Zaidi, visits Turkey in late July.

Basra: The Long Game

That strength, however, has a shelf life, with Basra-Haditha shortening it in two distinct ways.

The first is territorial. Baghdad has spent recent months rehabilitating a separate federal line — from the Kirkuk fields through Salah al-Din and Nineveh provinces to the Fishkhabur border crossing — that lets crude move without transiting the KRI’s pipeline, built in 2014, albeit still passing through KRI-controlled territory. That line is nearly ready: Iraq's Oil Ministry said in March that it could be running within about a week of completing final testing.

When the new Basra-Haditha study refers to its Ceyhan option, it is expected to run through Baiji, tying into the same federal corridor that Kirkuk's bypass line uses — avoiding a revival of dependence on the KRI’s pipeline.

The second is volume, which matters more. Kirkuk's output is roughly 380,000 bpd, most already committed to domestic refining. Combined with KRI production, the northern axis tops out around 650,000 bpd — at least for now. Turkey wants Ceyhan monetized at or near its 1.5mn bpd nameplate capacity. Only Basra crude can realistically fill that gap.

The negotiation has shifted from a Kirkuk-Ceyhan renewal to a Basra-Haditha-Ceyhan redesign: the question is no longer whether Turkey remains an outlet for northern Iraq, but whether Ceyhan becomes the Mediterranean outlet for southern Iraq.

That is a more complicated outcome for Ankara than it first appears. Higher throughput at Ceyhan is a shared objective, but a route built and controlled end-to-end by Baghdad would downgrade the KRI from an indispensable Turkish partner to just another supplier of limited crude volumes.

The KRI pipeline will not disappear. Its fields still need an outlet, and the existing line remains the natural one. What changes is Baghdad's dependence on it. Today, the KRI pipeline matters because it is effectively the only proven route moving northern crude to Ceyhan, giving Erbil leverage in disputes over customs, revenues and dollar access. A federal Basra-Haditha-Baiji-Fishkhabur corridor would give Baghdad an alternative under its control, leaving Erbil with leverage largely concentrated at the Fishkhabur crossing rather than across the export system as a whole.

Turkey's Countermove

Ankara is not simply reacting. Bayraktar has separately pitched extending the existing Iraq-Turkey Pipeline south from Kirkuk to Basra — securing a claim on the same southern crude before Baghdad's routing decision forecloses Ceyhan's share of it, which he has described as already resting on a "principal agreement" between the two governments, with a fuller framework expected within months.

Turkish commentary has been blunt about the downside: a Kirkuk-Baniyas or Basra-Haditha-Baniyas success would risk sidelining Turkey entirely, costing it transit revenue and damaging its energy-hub narrative. Cem Erdem’s TPAO, meanwhile, is expanding its upstream partnerships in Iraq, giving Ankara commercial relationships with many of the same international firms involved in Iraq's broader energy development, regardless of which export route ultimately advances.

Iraq’s Options

Iraq's decisions, not Turkish preferences, will determine which route wins, and those decisions won't ultimately turn on the feasibility studies now underway. Pipelines, at least in the contested Middle East, have not worked that way since the early 1950s, when the original Kirkuk-Baniyas pipeline (now defunct) was built.

The US-Qatari study will produce a technically credible recommendation, but whether new Iraqi crude ends up at Ceyhan, Baniyas, or both will hinge on Turkey's reliability as a transit partner, the durability of the Damascus government and how comfortable Iraq's government and its oil companies are with routing strategic barrels through a Syria still being rebuilt.

Both routes could well be built. Basra-Haditha was designed from the outset as a multidirectional trunk rather than a single-destination line, and nothing in Iraq's posture suggests it intends to choose exclusively. Turkey's leverage is real but asymmetric: strong over Ceyhan, where it is the transit state and Baghdad currently needs the outlet more than Ankara needs the fees, but limited over Baniyas, where Turkey has no transit role but some influence with the new Syrian government, especially if Qatari influence is added to Turkey’s.

One risk applies regardless of which route is chosen: pumping stations and export terminals are now demonstrably attractive military targets, a lesson reinforced both by strikes during the Hormuz crisis and by Ukraine's ongoing campaign against Russian energy infrastructure. Ceyhan and Baniyas share that exposure in principle, but Ceyhan is the safer bet in practice, given Turkish military capability to protect it.