ERBIL, Kurdistan Region - The representatives of the Iraqi government and oil companies operating in the Kurdistan Region on Wednesday held their first meeting in Dubai, discussing the fate of the Region’s oil exports which have been halted for months, according to a statement by the companies. Export of Kurdistan Region’s oil through the Iraq-Turkey pipeline has been halted since March 23 when a Paris-based arbitration court ruled in favor of Baghdad against Ankara, saying Turkey had breached a 1973 agreement by allowing Erbil to begin independent oil exports in 2014. The Association of the Petroleum Industry of Kurdistan (APIKUR) said in a statement that it held its first meeting with the representatives of the Iraqi government as well as Iraq’s State Organization for Marketing of Oil (SOMO) and the North Oil Company in Dubai. The APIKUR, which includes a number of international oil and gas companies operating in the Kurdistan Region, said that its members’ focus during the Wednesday was “to enable the rapid restart” of the oil exports from Iraq and the Kurdistan Region to Turkey “through a proposal for the member companies to sell their entitlement oil” to the federal government. The representatives of the umbrella group and the Iraqi government “emphasized the urgency of resuming full oil production and exports to global energy markets under mutually acceptable commercial terms. As the most expedient way to resume exports through the Iraq-Türkiye Pipeline (ITP), APIKUR proposed that SOMO negotiate crude oil purchase/sale contracts with APIKUR members,” read the statement. “Under their Production Sharing Contracts (PSCs), APIKUR member companies have the right to sell their share of oil production (their entitlement oil) and the parties discussed how APIKUR member companies could sell oil to MoO/SOMO for subsequent transport through ITP and onward sale to international markets,” it added. APIKUR also said its representatives told the Iraqi authorities that its members “will be able to resume full oil production when there is a clear, well-defined, legally-binding agreement on oil sales and export terms, including payments for past and future sales.” The Iraqi government has not commented on the Dubai meeting. The statement noted that the Iraqi government delegation “acknowledged that past debts would have to be honoured and that contractual arrangements would have to be acceptable to all parties, including the Kurdistan Regional Government. APIKUR representatives reiterated that existing commercial terms must remain in place, and the existing PSCs are valid.” Kurdistan Region President Nechirvan Barzani on Friday said Baghdad’s failure to pay suitable fees to oil producers is one of the main obstacles to resuming oil exports through Turkey. “Now Baghdad is really the issue because Turkey has announced that it is ready and willing to accept” resuming exports, Barzani said during a press conference in Paris. Erbil and Baghdad have had multiple rounds of talks about resuming the exports and Barzani said there are still “some measures” that they need to agree on, including contracts the Kurdistan Regional Government (KRG) has signed with oil companies. He said that Iraq treats oil companies operating in federally-controlled areas as service providers while the KRG treats them as “partners.” “For example, in the budget law, they [Iraq] have set the [production] fee per oil barrel from the Kurdistan Region at six dollars, which is very low. This has to be increased because they have set the fee [for their oil companies] at a higher amount,” he said. The APIKUR said last month that Baghdad and Erbil have lost seven billion dollars since March due to the export halt. Safeen Dizayee, head of the KRG’s Department of Foreign Relations, said in September the loss was $6 billion. Barzani said on Friday that the halt has cost Iraq five billion dollars. Control over oil exports and revenues has long been a source of friction between Erbil and Baghdad. Barzani said the problem now is technical rather than political. Prior to the halt, about 400,000 barrels of oil were being exported daily by Erbil through the pipeline that runs to the Turkish port of Ceyhan, in addition to some 75,000 barrels from Kirkuk oil fields controlled by the Iraqi government. According to the highly-contentious Iraqi federal budget passed in June, the KRG is obliged to sell 400,000 barrels of crude oil through Iraq’s national oil marketing body, alternatively Baghdad would use Kurdish oil domestically. The loss in oil revenues has worsened the financial situation and left the KRG unable to pay its public sector without assistance from Baghdad. The two governments, however, cannot agree on the Kurdistan Region’s financial entitlements.
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