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Iraq's higher demand for Turkish fuel a strain on border crossings

Source: Reuters - Thu, 19 Jun 2014 13:01 GMT
Author: Reuters
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* Iraqi government forces battling militants for refinery control

* Iraqi demand for fuel could cause bottleneck at border

* Long queues at petrol stations in northern Iraq (Updates with Arbil situation, more Yildiz comments)

By Orhan Coskun

MOSCOW, June 19 (Reuters) - Iraq's extra demand for Turkish fuel due to the Baiji refinery attack will strain the limited border export capacity, Turkish Energy Minister Taner Yildiz said on Thursday.

Iraqi government forces battled Sunni militants for control of the country's biggest refinery on Thursday as Prime Minister Nuri al-Maliki waited for a U.S. response to an appeal for air strikes to beat back the threat to Baghdad.

Yildiz told reporters during a trip to Moscow that Iraqi demand for Turkish refined oil products could cause a bottle-neck at the border with northern Iraq and it was unclear whether the demand could be fully met.

"This increase in the demand for refined oil products will cause a build-up of activity at the Habur border gate. Physical conditions including security concerns will determine whether the demand can be met," Yildiz said.

In Arbil, the capital of Iraqi Kurdistan which remained stable amid the increasing violence across the north of the country, there were long queues at petrol stations due to panic buying even though there were no actual shortages.

"People are panicking because of the Baiji refinery," one taxi driver in Arbil said on Wednesday night. "Deliveries are coming though. There are few shortages."

Officials from the Kurdistan Regional Government (KRG) visited Turkey in April and started talks on opening five new border gates to avoid the frequent long queues at Habur.

Turkish Trade Minister Hayati Yazici said last November that Turkey had agreed with Iraq on opening two new border gates after talks with Iraq's central government and the KRG.

None of these gates have been so far been opened, leaving Habur as the only crossing.

OPEC member Iraq was Turkey's biggest crude oil supplier in 2013 and it buys back refined oil products, particularly diesel, to meet its booming electricity demand.

"This refinery was supplying northern Iraq but now it is unable to do that. We already supply fuel to the region to a certain extent," Yildiz said.

Turkey extended a warning to its citizens in Iraq to leave all but the Kurdish-run north on Wednesday, citing a potential battle for Baghdad and saying "negative propaganda" was being spread against it in the Shi'ite-dominated south.

Eighty Turkish nationals were seized by insurgents in the northern Iraqi city of Mosul last week, 49 of them snatched from the Turkish consulate, including special forces soldiers, diplomats and children.

Meanwhile, oil flow at Iraqi Kurdistan's pipeline link to Turkey continued and a third export cargo shipped to world markets independently was scheduled to load this weekend.

Yildiz said buying crude oil from the KRG was definitely an option. "Tupras has not yet bid for this oil but it could in the coming period." (Additional reporting by David Sheppard in Arbil, Writing by Daren Butler and Humeyra Pamuk, Editing by Nick Tattersall and William Hardy)

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