ERBIL, Kurdistan Region - Iraq’s Oil Minister Hayyan Abdul-Ghani on Monday told Rudaw that both Erbil and Baghdad are working on adjusting the Region’s contracts with the International Oil Companies (IOCs) to the Iraqi constitution and expressed optimism about a prompt resumption of Kurdish oil exports.
Abdul-Ghani arrived in Erbil on Sunday accompanied by an Iraqi oil ministry delegation, and met with KRG Prime Minister Masrour Barzani and Natural Resources Minister Kamal Muhammad Salih, to discuss the outstanding issues between the Region and Baghdad over the resumption of the Kurdish oil exports.
The oil minister told Rudaw’s Sangar Abdulrahman that during his meetings with Kurdish officials, the nature of the Region’s contracts with the IOCs was discussed, noting that the KRG’s natural resources ministry presented a “complete explanation” of the economic model and the details of the contracts.
The IOCs and the KRG are bound by Production Sharing Contracts (PSCs), which Abdul-Ghani noted are against the Iraqi constitution, adding that the Iraqi government licenses companies under Profit Sharing Contracts.
“We have a project to adjust those contracts with the laws that are allowed by the Iraqi constitution,” Abdul-Ghani said.
Under the Kurdistan Region’s PSC model, the IOCs cover the entire cost of production while the KRG receives the lion’s share of the profits from successful projects.
In August, Myles Caggins, the spokesperson of the Association of the Petroleum Industry of Kurdistan (APIKUR) told Rudaw English that the association members would not produce oil unless there was an agreement and a full understanding of how much they would get paid.
Caggins said the oil companies would receive $6 per barrel based on discussions that have taken place with Baghdad, stressing that this is “not enough.” He warned that if an agreement is not reached, APIKUR members would take the matter to a London arbitration court.
Abdul-Ghani said the oil ministry has agreed with the KRG officials to hold meetings with the representatives of the IOCs in the Kurdistan Region, adding that they will try to reach a solution that satisfies all parties.
The Iraqi official said that the resumption of Kurdish oil exports through Turkey’s Ceyhan port was also discussed at the meeting, stressing that both sides “were serious about restarting production and exports of oil,” and expressing optimism that oil exports will soon resume.
Exports of Kurdistan Region’s oil through the Iraq-Turkey pipeline have 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.
According to the Iraqi federal budget the Kurdistan Region is obliged to hand over, on a daily basis, at least 400,000 barrels of crude oil to Iraq’s State Oil Marketing Organization (SOMO) to be exported through Turkey’s Ceyhan port, or be used domestically in case it is not exported.
There have been several meetings between Turkish, Iraqi, and Kurdish officials since the court ruling, but exports have yet to resume. Prior to the halt, around 400,000 barrels a day were being exported by Erbil through Ankara, in addition to some 75,000 barrels of Kirkuk oil daily through the same pipeline.
The KRG is heavily reliant on oil revenues and an inability to sell its crude has severely impacted its economy. Erbil has lost billions of dollars since the exports were halted.
