Peregraf
The Kurdistan Regional Government (KRG) Council of Ministers, in its latest meeting, urged the Iraqi State Oil Marketing Organization (SOMO) to resume oil exports from the Kurdistan Region as soon as possible, ensuring that all revenues are directed to the federal treasury. This move aligns with efforts to implement the recently approved amendment to Iraq’s budget law, which facilitates the restart of oil exports that have been halted since March 2023.
According to a press release following the meeting, KRG Prime Minister Masrour Barzani welcomed the amendment, calling it a significant step toward resolving the ongoing oil export dispute between Erbil and Baghdad. The KRG Cabinet reaffirmed its commitment to the revised law and instructed the Ministry of Natural Resources to maintain continuous coordination with the Iraqi Oil Ministry, SOMO, and oil-producing companies operating in the Kurdistan Region.
Salary Payments and Financial Planning
Regarding public sector salaries, Barzani stated that the Council of Ministers had approved several proposals to ensure salary payments for all twelve months of the year. These proposals focus on restructuring the financial framework, optimizing revenues and expenditures, and managing public employment and government-owned properties for 2025, in line with the latest agreement between the KRG and the Iraqi Ministry of Finance.
Progress in Oil Negotiations
Oil exports from the Kurdistan Region have remained suspended since Turkey halted the flow through the Ceyhan pipeline in March 2023, following an international arbitration ruling in favor of Iraq. While no official timeline has been announced for resumption, the initiation of oil transfers to SOMO signals progress in negotiations between the federal and regional governments.
On February 2, 2025, the Iraqi Parliament approved an amendment to address financial and logistical barriers to resuming Kurdistan’s oil exports. Kurdish MP Dilan Ghafoor told Peregraf that the amendment, submitted by the Iraqi government, sets the production and transportation costs of Kurdistan’s oil at $16 per barrel, to be covered by the Iraqi Ministry of Finance.
Both the KRG and oil companies have welcomed this allocation as a key step toward restarting exports. However, the $16 per barrel rate is a temporary measure. Within 60 days, an independent assessment by a specialist firm—jointly appointed by the KRG and the Iraqi federal government—will determine the actual production and transportation costs of Kurdistan’s oil fields.
Financial Challenges and Market Impact
The prolonged halt in oil exports has severely impacted the Kurdistan Region’s economy, leading to financial difficulties in paying public sector salaries and maintaining essential services. Observers emphasize the urgency of resolving financial and logistical challenges, as both Baghdad and Erbil heavily depend on oil revenues.
The international market is closely monitoring developments, given Iraq’s role as one of OPEC’s largest producers. A swift resolution could help Iraq restore its full export capacity amid ongoing fluctuations in global oil prices.