Oil exports from the Kurdistan Region through the Iraq-Turkey pipeline have been halted since March 23, 2023 after a Paris-based arbitration court ruled in favor of Baghdad against Ankara, saying the latter had breached a 1973 agreement by allowing Erbil to begin independent oil exports in 2014.
“The GoI [Government of Iraq] has not taken the required actions to open the ITP [Iraq-Turkey pipeline] and enable oil exports from the Kurdistan Region of Iraq, despite Turkiye’s announcement in October 2023 that the pipeline is operational and ready to export oil,” said the Association of the Petroleum Industry of Kurdistan (APIKUR) in a statement.
The association lamented that despite several meetings between Iraqi and Kurdish officials, as well as representatives of international oil companies (IOCs) in the Kurdistan Region, “there has been no real progress to reopen the ITP.”
The closure prevents the export of 450,000 barrels of crude oil per day from the Kurdistan Region, costing Baghdad and Erbil billions of dollars in losses.
The loss in oil revenues has severely worsened the Kurdistan Regional Government’s (KRG) economy, and has left the government unable to pay its public sector without assistance from Baghdad.
Approximately $1 billion are lost every month the pipeline is closed, according to APIKUR, putting the estimated loss of revenue to Iraq at more than $11 billion.
“Each day the pipeline is closed, losses continue to mount and the people, economy, and investment reputation of Iraq suffers,” said APIKUR spokesperson Myles Caggins.
Earlier this month, Iraqi Foreign Minister Fuad Hussein told Bloomberg that Baghdad may amend its budget to pay recovery and transit fees to IOCs in a bid to restart oil exports.
Last month, APIKUR called on US officials attending the Munich Security Conference to use the “prime opportunity” presented by the event to discuss the issue of oil exports directly with Iraqi Prime Minister Mohammed Shia’ al-Sudani, who was also attending the conference.
“All eight APIKUR member companies remain committed to their contracts with the KRG and have been repeatedly assured by the KRG that the KRG, for its part, is fully committed to these contracts as well,” the statement said.
As a solution for the impasse, APIKUR called for clear and transparent meetings between Baghdad, Erbil, and the IOCs to guarantee payment for past and future oil exports, stressing that the IOCs’ “current commercial terms and economic model must be maintained.”
The association further said it had conveyed to US President Joe Biden’s administration and US Congress members that the White House must not allow the visit of Sudani to Washington unless the pipeline is reopened, IOCs get guarantees of payment for oil exports, and Baghdad fully implements the federal budget for the KRG.
