Kurdistan Region Pursues Tripartite Agreement to Resume Oil Exports Through Federal Channels

Peregraf 

The Kurdistan Regional Government (KRG) announced on Wednesday that it is working with Iraq’s Oil Ministry and international oil companies to finalize a tripartite agreement that would allow the resumption of oil exports through the federal State Oil Marketing Organization (SOMO) and channel revenues into the federal treasury.

The statement followed a meeting of the KRG Council of Ministers chaired by Prime Minister Masrour Barzani, where oil exports, non-oil revenues, pensions for Peshmerga forces, and citizens’ loan relief were on the agenda.

Barzani confirmed that the KRG’s Ministry of Natural Resources has been instructed to intensify talks with oil companies to resolve outstanding contractual issues and remove obstacles to restarting exports. “The Council of Ministers emphasized the need to continue efforts with the federal government and oil companies to reach a tripartite agreement in the public interest,” he said.

Oil exports from the Kurdistan Region have been suspended since March 2023, when an international arbitration ruling forced Turkey to halt flows through the Ceyhan pipeline following a long-running dispute with Baghdad. The shutdown has cost Iraq and the Kurdistan Region an estimated $50 billion in lost revenue, according to Kurdish officials, worsening the region’s financial crisis and leaving over 1.2 million public sector employees struggling with delayed salaries.

The KRG and Baghdad reached an agreement on August 11 under which Erbil would retain 50,000 barrels per day for domestic consumption, while the remainder would be exported via SOMO. However, resuming actual exports still depends on a broader arrangement between Iraq and Turkey, as well as guarantees to oil companies operating in the Kurdistan Region that their financial dues will be secured.

At Wednesday’s meeting, Barzani stressed that the KRG’s position on non-oil revenues is rooted in federal law. He called on Baghdad to adopt Erbil’s proposal for classifying and sharing customs, taxes, and border revenues in line with Iraq’s Federal Financial Management Law (2019) and the Federal Budget Law. “While the KRG demands its entitlements according to the law, this requires the federal government to accept the KRG’s legal proposals and views,” Barzani said.

The Council also addressed the long-delayed implementation of the Peshmerga Service and Pension Law (2007). Ministers directed the KRG Ministry of Finance and Economy, in coordination with Iraq’s National Pension Board, to identify the best legal mechanism to improve pensions for retired Peshmerga. The Council stressed that the pensions must be disbursed as soon as possible, recognizing the sacrifices of Kurdish security forces.

In a third decision, the Cabinet approved partial debt relief for citizens who previously obtained loans and advances from state-owned banks. Beneficiaries will be eligible for a 15 percent reduction in outstanding amounts, with the Ministry of Finance instructed to issue implementation guidelines.

The meeting highlights the mounting urgency for Erbil and Baghdad to resolve their financial disputes and stabilize revenues. For the KRG, restoring oil exports through a tripartite mechanism remains critical to ending salary delays, covering pensions, and easing the strain on public finances.