Peregraf
A crucial meeting in Baghdad aimed at restarting oil exports from the Kurdistan Region through the Iraq-Turkey pipeline has ended without an agreement, despite the presence of a U.S. diplomat attempting to ease negotiations, Peregraf has learned from sources in the Kurdistan Regional Government (KRG).
The meeting brought together representatives from the KRG Ministry of Natural Resources, the Iraqi Federal Oil Ministry, and international oil companies operating in the Kurdistan Region. Discussions centered on removing obstacles to oil exports, but disagreements over financial entitlements prevented a breakthrough.
According to a senior KRG source, oil companies are demanding the settlement of their outstanding debts, which amount to $1 billion, and guarantees for future payments. However, Baghdad has refused to assume responsibility for these debts, stalling negotiations.
The deadlock persists despite earlier remarks by Iraqi Oil Minister Hayan Abdul Ghani, who had suggested that an agreement on resuming exports via Iraq’s state-owned SOMO company was imminent. Abdul Ghani had indicated that initial exports from the Kurdistan Region would begin at 185,000 barrels per day, with gradual increases to meet the quotas specified in the Iraqi budget. However, no progress has been made on implementing this plan.
The broader dispute over oil exports dates back to March 25, 2023, when shipments through Turkey’s Ceyhan port were halted following a ruling by the Paris Arbitration Court in favor of Iraq. The ruling led to a suspension of Kurdish oil exports, worsening financial difficulties for the Kurdistan Region.
The Iraqi government has since sought to regulate oil production in the Kurdistan Region under its federal budget law. Baghdad has agreed to pay the KRG $16 per barrel of oil until an international company determines production costs. However, ongoing financial disputes, including the issue of unpaid debts to oil companies, have prevented an agreement from being reached.
With no resolution in sight, the future of oil exports from the Kurdistan Region remains uncertain, prolonging economic instability in the region.