The Iraqi government proposed an amendment to the three-year federal budget law’s Article 12 in November. The lawmakers passed the bill on Sunday after months of discussions.
Iraqi Prime Minister Mohammed Shia’ al-Sudani “expresses his appreciation for the responsible and constructive step” by the parliament,” said the federal government’s spokesperson in a statement.
“The government is committed to implementing its program based on the priorities previously approved by the representatives of the people, aimed at meeting the aspirations of all Iraqis across the country,” added Basim al-Awadi.
The law authorizes compensation to international oil companies (IOCs) operating in the Kurdistan Region for oil production and transportation costs, setting the rate at $16 per barrel, a substantial increase from the $6.90 set in the federal budget that was passed in June 2023.
Oil exports from the Kurdistan Region through the Iraq-Turkey pipeline have been suspended since March 2023 after a Paris-based arbitration court ruled in favor of Baghdad against Ankara, saying the latter had violated a 1973 pipeline agreement by allowing Erbil to begin independent oil exports in 2014.
Before the halt, Erbil exported around 400,000 barrels per day through the pipeline, in addition to some 75,000 barrels of Kirkuk’s oil.
Kurdistan Region Prime Minister Masrour Barzani also welcomed the vote.
“I hope that this positive step in amending the budget law will be the beginning of resolving all other disputes and the federal government's commitment to provide financial entitlements of the Kurdistan Region,” he said.
Sudani called the relevant authorities in the federal and regional governments to “immediately commence implementation of the amendment,” adding that “This step aims to optimize the utilization of Iraq’s natural resources, particularly oil wealth, ensuring that these resources serve as a foundation for stability and a driving force for achieving further progress in development plans and programs that meet the needs of the Iraqi people.”
The KRG has struggled to pay the salaries of its civil servants on time and in full for a decade due to a financial crisis that further deteriorated after the oil export halt. Erbil is reliant on its local income and federal budget funds.
