Iraq green lights plan to resolve Kurdistan oil dispute

KRG-oil

The Iraqi parliament on February 2nd approved a budget amendment to subsidise production costs for international oil companies operating in the semi-autonomous Kurdistan region, aiming to facilitate the resumption of northern oil exports, according to the New Arab via Reuters.

The amendment raises the rate to $16 per barrel, an increase from a previous proposal of $7.9 per barrel for transportation and production costs, which the Kurdistan Regional Government (KRG) had rejected as insufficient.

Parliamentary approval represents a significant step toward resolving the nearly two-year-long dispute over Kurdish oil exports and improving relations between Baghdad and Erbil.

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Unblocking exports is also expected to alleviate economic strain in the Kurdistan region, where the suspension has caused salary delays for public sector employees and reductions in essential services.

Kurdish lawmaker, Rebwar Orhaman said: “Parliament’s approval is very significant to resolve oil dispute between Baghdad and Erbil and it will help expedite the resumption of Kurdistan oil exports to boost the country’s revenues.”

According to lawmakers and oil ministry officials, Iraq’s oil ministry and the KRG’s Ministry of Natural Resources will coordinate to appoint an international consultant within 60 days to determine fair production and transportation prices.

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If no consensus is reached, the Iraqi cabinet will select a consultancy by itself, without any involvement from their Kurdish counterparts.

The budget amendment, initially proposed by Iraq’s cabinet in November 2024, also mandates that the KRG transfer its oil production to the state-run State Oil Marketing Organisation (SOMO).

Oil exports through the KRG’s pipeline were suspended by Turkey in March 2023 after the International Chamber of Commerce ordered Ankara to pay Baghdad $1.5 billion in damages for Kurdish oil exports by the KRG during 2014 and 2018, that had not been authorised.

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Efforts to restart exports have stalled due to ongoing disagreements between the KRG and Iraq’s federal government. Iraqi Kurdistan itself has also faced governance struggles of its own, which has worsened economic issues in the region. 

The New Arab via Reuters

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