First, the prime minister must approve quantities of oil needed for local consumption, the KRG’s team negotiating the matter with Baghdad said in a statement.
Implementing the amended budget law “requires, before resuming exports, an agreement on the quantities allocated for local consumption based on the actual needs of the region and its obligations, similar to the rest of Iraq. The federal side clarified that this matter requires the approval of the prime minister of the federal government,” read the statement.
The federal budget law was amended earlier in February, raising compensation paid to oil producers for production and transportation costs in order resolve an obstacle to restarting Kurdish oil exports that were halted nearly two years ago following an arbitration court ruling.
Baghdad’s oil ministry on Saturday announced the “completion of procedures” necessary to resume production and exports, and urged authorities in the Kurdistan Region “to deliver the quantities produced from the operating fields to the State Oil Marketing Organization (SOMO) to begin exporting via the Iraqi-Turkish pipeline and Ceyhan port, in accordance with the contracts signed with the nominated companies.”
The announcement came a few hours after Iraqi Prime Minister Mohammed Shia’ al-Sudani called for accelerating the resumption of Kurdish oil production in a meeting with Kurdistan Region President Nechirvan Barzani.
The second matter still to be resolved, according to the KRG statement, is establishing a mechanism for making payments to producers.
“The resumption of exports also necessitates agreeing on a clear and specific mechanism for paying the dues of production and transportation companies to the KRG, as stipulated in the law and detailed in the minutes of our meeting with the federal Ministry of Oil delegation,” it said, noting that this falls under the jurisdiction of the federal finance ministry.
Oil exports from the Kurdistan Region via the Iraq-Turkey pipeline were suspended in March 2023 following a ruling by a Paris-based arbitration court, which sided with Baghdad. The court determined that Ankara violated a 1973 pipeline agreement by permitting Erbil to export oil independently starting in 2014.
Before the suspension, Erbil was exporting approximately 400,000 barrels of oil per day via the Iraq-Turkey pipeline, in addition to around 75,000 barrels of oil from Kirkuk.