On August 1, 2026, Türkiye and Iraq signed a new transportation agreement to continue operating the Iraq-Türkiye Crude Oil Pipeline for another year.[i] This interim arrangement established between BOTAŞ and Iraq’s oil marketing and production organizations, SOMO and NOC, fills the gap that could arise following the expiration of the legal framework—which has been in place for nearly half a century—on July 27. This ensures that the flow to Ceyhan is maintained while buying time to negotiate a more comprehensive energy partnership.
At first glance, the one-year extension appears to be a technical one. However, Ankara and Baghdad face a broad agenda ranging from transportation tariffs to volume guarantees, and from investments to the resolution of disputes. Türkiye wants to utilize the pipeline’s idle capacity. Iraq, meanwhile, is seeking a reliable outlet to protect its oil revenues from crises in maritime traffic and from overreliance on a single export route.
The figures illustrate the gap between potential and current performance. While the pipeline system’s total technical capacity reaches approximately 1.5 million barrels per day, the current flow is around 170,000 barrels.[ii] The new regulation covers a daily transport capacity of 750,000 barrels. Ceyhan’s strategic value is measured not only by the volume it transports today, but also by the volume it can bring online on days when Gulf exports are disrupted.
A large portion of Iraq’s oil exports is shipped to the Gulf via terminals around Basra. While this concentration ensures high volumes and low costs under normal circumstances, it leaves budget revenues vulnerable to external developments whenever maritime transit is disrupted by a crisis. Ceyhan cannot take on the entire load of the southern terminals in the short term. However, by diversifying export routes, it can provide Baghdad with room to maneuver and offer customers a second gateway.
For Ceyhan to become a viable alternative, the pipeline starting in Kirkuk must be supplied by the major production fields in southern Iraq. The new connection proposed along the Basra-Haditha-Kirkuk-Ceyhan route could extend the existing infrastructure in the north to the country’s main reserve regions. Such an expansion would require investments in pumping stations, storage facilities, metering systems, and security measures. For this reason, the one-year agreement serves as a political bridge during which investment decisions will be prepared, rather than as a final solution.
The fate of the pipeline is determined as much by the durability of the steel as by the capacity for compromise in Iraqi domestic politics. Without a permanent arrangement among Baghdad, Erbil, and international producers regarding export authorization, production costs, and the transfer of revenues to the federal budget, it will be difficult to ensure a stable volume of oil flowing to Ceyhan. The prolonged disruption that began in 2023 has demonstrated how legal disputes can render physical infrastructure inoperable.[iii] The new era requires clear rules to prevent a repeat of this experience.
Türkiye’s direct participation in Kirkuk’s production fields is particularly important at this point. TPAO’s acquisition of a 15 percent stake in BP Energy Company of Kirkuk Limited brings Türkiye into the production process in fields estimated to contain resources equivalent to approximately 3 billion barrels of oil.[iv] A natural link can be established between the increase in production and the pipeline’s utilization rate. Ankara is thus moving from its role as a provider of transit services toward becoming a partner with a stake in the production, transportation, and marketing chain.
The benefits Ceyhan will provide for Türkiye extend beyond transit revenues. The convergence of Iraqi oil with the Baku-Tbilisi-Ceyhan pipeline, the marine terminal, storage facilities, and Mediterranean markets in a single hub could help solidify Türkiye’s goal of becoming an energy hub. A steady, high-volume flow could also create a more predictable environment for refinery and petrochemical investments. This structure strengthens Ankara’s facilitating role in contributing to supply security during times of crisis.
From Baghdad’s perspective, the key benefit is the expansion of its export dominance. The northern route to the Mediterranean could enable Iraqi oil to reach European markets without having to pass through the Gulf. The Mediterranean route also entails its own security, insurance, and freight costs. Nevertheless, an Iraq with access to two separate seas can negotiate from a position of greater strength in pricing and transportation discussions. The risk is not eliminated; rather, it is distributed across different, manageable channels.
The Türkiye-Iraq Development Corridor places this energy equation within a broader economic context. The railway and highway network, planned to extend from the Port of Fav to the Turkish border, could be supplemented in the future with oil, natural gas, and electricity connections. The development of a new pipeline stretching from Basra to Ceyhan, in conjunction with a transportation corridor, could give rise to an integrated system linking southern Iraq to the Mediterranean and European markets. The existing pipeline could serve as an early and feasible component of this major project.
From Europe’s perspective, the potential increase in Iraqi oil flowing through Ceyhan adds a new level of flexibility to supply diversification. Türkiye’s infrastructure along the Mediterranean coast enables it to consolidate Middle Eastern supplies at a location close to European markets. This situation could provide Ankara with connectivity, Baghdad with export autonomy, and recipient countries with an alternative supply option. As the pipeline approaches full capacity, it could shift one of the centers of gravity in regional energy diplomacy from the Gulf to the Eastern Mediterranean.
The success of the long-term agreement depends on the lessons learned from past disputes. It is crucial to determine who holds the export authority, where the oil is delivered, how it is measured, and into which account the revenue is transferred. Transportation fees and minimum volume commitments are expected to ensure that the investment burden is shared equitably between the two parties. If a robust dispute resolution mechanism is established, the pipeline could evolve from a facility halted by court rulings into a predictable partnership.
The security aspect is also an integral part of the economic plan. Attacks, acts of sabotage, and maintenance deficiencies in northern Iraq have repeatedly disrupted the flow of goods in the past. Joint monitoring centers, rapid repair teams, and advanced monitoring systems in critical sections can reduce downtime. Ensuring that communities along the route benefit from investments in employment and services can strengthen the social protection of the infrastructure. Energy security depends not only on protecting the pipeline but also on fostering stability in the regions through which the pipeline passes.
The confidence that the oil pipeline will instill could also extend to natural gas and electricity trade. To expand the $17 billion trade volume between the two countries, a steady flow of energy, logistics investments, and mutually supportive border infrastructure are absolutely essential. From Baghdad’s perspective, access to the Turkish market and to Europe converge along the same route, while from Ankara’s perspective, Iraq could strengthen its role as an energy supplier and regional partner. This mutual benefit will enhance the political resilience of the long-term agreement.
In conclusion, the one-year agreement represents not so much a holding period as a preparatory phase for a new order in energy relations between Türkiye and Iraq. For Ceyhan to serve as a genuine alternative to the Gulf export routes, the 750,000-barrel transport capacity must translate into actual flow, connections with the southern fields must be established, and the Baghdad-Erbil relationship must be placed on a solid legal foundation. If these conditions are met, Türkiye can move toward a more central role in energy diplomacy, while Iraq can reduce the vulnerability of having its oil exports dependent on a single maritime gateway. The value of this one-year bridge will ultimately be measured by how long and reliable a corridor is established.
[i] “Irak Petrolünde Bir Yıllık Yeni Anlaşma”, T.C. Enerji ve Tabii Kaynaklar Bakanlığı, https://enerji.gov.tr/haber-detay?id=31887, (Date Accessed: 03.08.2026).
[ii] “Türkiye, Iraq sign one-year oil pipeline deal”, Reuters, https://www.reuters.com/business/energy/iraq-expects-sign-extension-pipeline-deal-with-Türkiye-ina-says-2026-08-01/, (Date Accessed: 03.08.2026).
[iii] “Iraq resumes Kirkuk crude exports via Ceyhan after Baghdad-KRG deal”, Reuters, https://www.reuters.com/world/middle-east/iraqi-government-kurdish-authorities-reach-deal-resume-oil-exports-Türkiyes-2026-03-17/, (Date Accessed: 03.08.2026).
[iv] “BP welcomes Türkiye Petrolleri Anonim Ortaklığı into Kirkuk redevelopment in Iraq”, BP, https://www.bp.com/press-and-publications/press-releases/bp-welcomes-tuerkiye-petrolleri-anonim-ortakligi-into-kirkuk-redevelopment-in-iraq, (Date Accessed: 03.08.2026).
