The Iraqi oil ministry recently invited the IOCs and the Kurdistan Regional Government (KRG) to Baghdad to urgently discuss the resumption of the Region’s oil exports through the Iraq-Turkey pipeline which have been halted for more than a year. The trilateral meeting took place in the Iraqi capital on Sunday.
Myles Caggins, spokesperson for the Association of the Petroleum Industry of Kurdistan (APIKUR), an association of oil companies working in the Kurdistan Region, told Rudaw on Monday that the meeting was important, positive and productive, hoping for more similar meetings in the near future “to resolve this issue.”
“What the international oil companies have provided to the ministry of oil in Baghdad is a copy of sample Production Sharing Contracts (PSCs)... There is an example of a current contract that is between the international oil companies and KRG. And we have provided this to Baghdad and we provided the fiscal terms,” the spokesperson said.
“Baghdad is now wanting to have discussions about the contracts and the process and the payments and budget for the resumption of exports, for future exports through the Iraq-Turkey pipeline,” he added.
A senior official from one of one of the key oil producers operating in the Kurdistan Region told Rudaw on the condition of anonymity on Saturday that Baghdad had asked them to disclose their contracts with Erbil in order to attend the Sunday meeting.
“There is legal jeopardy for us to share our contract with existing court ruling against the same contracts in Baghdad,” added the source.
The goal of the meeting on Sunday was to resolve all obstacles that have prevented resuming exports of Kurdistan Region’s oil since they were halted by a court order in March last year. A Paris-based arbitration court ruled in favor of Baghdad that Ankara had breached a 1973 pipeline agreement by allowing Erbil to begin independent oil exports in 2014.
Despite numerous meetings between Erbil, Baghdad and Ankara, the oil exports have yet to resume. Iraq’s oil ministry has blamed the IOCs for Erbil and Baghdad’s failure to reach an agreement.
In March, the Iraqi oil ministry said that in accordance with the federal budget, the average cost for producing one barrel of oil is $6.90, while the IOCs operating in the Kurdistan Region are asking for three times that amount as well as repayment of billions of dollars of debts that are “unknown to the federal government.”
“The APIKUR member companies want to ensure that any changes to the contracts keep the same financial terms. So if there is a certain percentage of the sale of a barrel of oil that the companies get today, we want to make sure that that same type of percentage is going to happen with a future contract, even if the process in these signatories that are parties to the contract are different,” Caggins told Rudaw on Monday.
He also stressed that they will not make any deals with the federal government without the consent of the KRG.
“And importantly, if there are to be any changes to the contract, the KRG must agree to the changes as well because the current contracts are between the KRG and international oil companies,” he noted.
“We are currently committed to our current contracts but we are open to discussions and potential modifications.”
Kamal Mohammed, acting minister of KRG’s natural resources ministry, said on Thursday that the oil companies operating in the Kurdistan Region “have invested large amounts of money in the Region’s oil fields and Baghdad should take this into consideration."
“The main obstacle before the resumption of Kurdistan Region’s oil is that the Iraqi oil ministry says the production cost is too much. The reason behind that is that the companies invested in the oil sector. However, Iraq spends trillions of dinar annually in the oil sector. Therefore, the management of the oil sector in Iraq and the Kurdistan Region are different: the sector is general in Iraq while it is private in the Region,” he explained.
