ERBIL, Kurdistan Region - Baghdad has completed all preparations with companies purchasing oil produced in the Kurdistan Region ahead of the resumption of Kurdish oil exports after more than three years of suspension, Ali Nizar Faiq, director general of Iraq's State Oil Marketing Organization (SOMO), said on Tuesday.
SOMO “has completed all of its contracts and commitments with purchasing companies and is ready to receive quantities once pumped by the producing companies and the [Kurdistan] Regional Government [KRG],” he told the state-run Iraqi News Agency (INA).
He added that "resuming exports will restore Iraq's luster as a primary supplier to the European market which is thirsty for this type of oil, especially in light of the Russian-European crisis and the absence of Russian supplies, as Iraqi oil is characterized by its similarity in quality to Russian oil."
The Iraqi federal government and the KRG have been locked in a long-running dispute over oil revenues and export rights. They have recently agreed that the KRG will deliver its oil to Iraq’s State Organization for Marketing of Oil (SOMO) and keep some for domestic production.
Despite this, Kurdish oil exports have yet to resume.
Faiq on Tuesday urged Baghdad, Erbil and international oil companies (IOCs) operating in the Kurdistan Region to complete mechanisms for implementing the federal budget law, underlining that efforts are ongoing to reach an accord that would pave the way for the resumption of Kurdish oil.
An amendment to the Iraqi budget law in early February set a temporary entitlement of $16 per barrel for production and transportation costs, to be paid to IOCs until an international consultant determines the real value. However, the amendment made no provision for repayment of past debts.
Bassim Mohammed Khuzair, a deputy of Baghdad’s oil minister, told Rudaw on Thursday that Iraq currently produces approximately 4.2 million barrels per day (bdp)and exports between 3.35 and 3.4 million bpd.
He added that KRG has yet to hand over oil to the federal government as of that day.
Oil exports from the Kurdistan Region through the Iraq-Turkey pipeline have been suspended since March 2023, when a Paris-based arbitration court ruled in favor of Baghdad against Ankara, saying the latter had violated a 1973 pipeline agreement by allowing Erbil to begin exporting oil independently in 2014.
Before the halt, Erbil exported around 400,000 barrels per day through the pipeline, in addition to some 75,000 barrels of Kirkuk’s oil.
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