ERBIL, Kurdistan Region - Disagreements over oil handovers and the Kurdistan Region's share of Iraq's 2027 federal budget remain unresolved, as senior officials from Baghdad and Erbil held fresh talks on Sunday and a Kurdish lawmaker proposed a compromise to overcome the dispute over oil production figures.
The federal government is seeking at least 400,000 barrels of oil per day (bpd) from the Kurdistan Region starting next year, while Erbil has proposed between 250,000 and 280,000 bpd. The two sides also disagree over the Region's share of the federal budget and the transfer of non-oil revenues to Baghdad.
"We proposed removing specific numbers relating to Kurdistan Region's oil production and instead agreeing that all of its oil be sold through SOMO [State Oil Marketing Organization]," Rebwar Karim, head of the opposition National Stance Movement (Halwest) faction in the Iraqi parliament, told Rudaw's Zana Kayani on Sunday.
Karim said he presented the proposal during Saturday's meeting of the State Administration Coalition, where much of the discussion focused on the federal budget and the Kurdistan Region's share.
The disagreements have repeatedly disrupted federal transfers to the Kurdistan Regional Government (KRG), delaying salaries for public sector employees. With Iraq preparing its 2027 budget, the volume of oil the KRG must handover and the financial obligations of both governments are the focal points of ongoing negotiations.
"If Baghdad does not agree to Kurdistan Region's figure of 265,000 barrels, and the Kurdistan Region does not agree to Baghdad's figure of 445,000 barrels, then let us remove the figures altogether," Karim said.
Under Karim's proposal, the Kurdistan Region would hand over all its oil production for sale through SOMO in return for its federal budget entitlements and the provision of fuel at official Iraqi prices.
"Do not forget that fuel in Kurdistan is very, very expensive right now," Karim said, referring to the rising cost of gasoline, gas and other petroleum products.
He urged Baghdad to either provide the Region with fuel or arrange for it to be sold locally "at the official Iraqi price," as in other parts of Iraq.
The commercial regular gasoline price on Monday in the Kurdistan Region varied by province, with a liter costing 1,120 Iraqi dinars ($0.74) in Erbil, 1,150 dinars ($0.76) in Sulaimani and 1,250 dinars ($0.82) in Duhok.
Karim said his proposal received a positive response from several political parties.
"Most of the parties welcomed the proposal," he said, suggesting that Baghdad could rely on the international companies already involved in verifying oil production to monitor the arrangement.
Prime Minister Ali al-Zaidi, who attended the meeting, raised the question of how oil production and deliveries would be monitored, according to Karim.
The State Administration Coalition said in a statement following Saturday's meeting that participants stressed the importance of approving the federal budget within constitutional deadlines and ensuring the fair distribution of national resources.
On Sunday, a senior federal delegation led by Deputy Prime Minister for Energy Affairs Mohsen al-Mandalawi met KRG Prime Minister Masrour Barzani in Duhok to discuss oil exports, energy cooperation and revenue arrangements.
The delegation, which included Iraq's oil and electricity ministers, discussed mechanisms for exporting and marketing the Kurdistan Region's oil, as well as outstanding issues in the energy sector.
Mandalawi stressed the importance of continued dialogue and coordination between Baghdad and Erbil to reach a common understanding on oil and energy, according to a statement from his office.
Dispute over budget share
The Kurdistan Region is seeking an increase in its federal budget share from approximately 12.7 percent to 14.14 percent, based on the results of Iraq's 2024 population census.
However, a draft of the 2027 federal budget obtained by Rudaw sets the Region's budget at approximately 12.7 percent of actual federal expenditures, excluding sovereign expenses.
Article 10 of the draft makes continued monthly budget transfers conditional on the KRG delivering at least 400,000 barrels of oil per day through SOMO and transferring all non-oil revenues to the federal government's coffers.
The draft also requires the KRG to hand over natural gas production exceeding its domestic needs and prohibits new oil and gas contracts without the involvement of the federal oil ministry.
Karim questioned the use of census results to determine the Region's share, saying Kurdish and Iraqi leaders had previously agreed that the census would not be used for certain purposes, including budget allocations.
"One of the agreements between Kurdish and Iraqi leaders stated that the census would not be used for three purposes, including the budget and financial distributions," he said.
Nevertheless, Karim said he would support securing an allocation exceeding 14 percent for the Kurdistan Region.
"This is money that goes to my people. Why would I oppose increasing the share?" he said.
The draft budget also proposes a mechanism to settle approximately 12.775 trillion dinars in outstanding financial entitlements accumulated between Baghdad and Erbil from 2004 to 2026 over three years.
The proposed oil delivery requirement has also raised concerns within the KRG.
KRG Deputy Minister of Natural Resources Ahmed Mufti told Rudaw earlier this month that exporting 400,000 bpd would be difficult without ensuring regular payments to international oil companies and providing guarantees for further investment.
"To reach 400,000 barrels, companies must continuously receive their entitlements, and guarantees must be provided to the oil and gas sector as well as the companies in the Kurdistan Region," Mufti said.
The two governments reached an agreement in 2025 to market Kurdistan Region's oil through SOMO, but disputes over production volumes, oil company payments and revenue sharing continue to derail a lasting agreement between the two governments.
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