“The Kurdistan Regional Government [KRG] will assume responsibility for compensating the oil producing companies for the amount of oil allocated for domestic use purposes in the Region according to a joint decision of the federal and regional council of ministers,” the KRG said in a statement.
It added that all oil quantities allocated for export “will be delivered to the State Oil Marketing Organization (SOMO) for export through the port of Ceyhan.”
Earlier this month, Baghdad and Erbil struck a new deal over finances and oil. The Iraqi government approved the agreement during a cabinet meeting and subsequently resumed the disbursement of the Kurdistan Region’s civil servants’ salaries.
Tensions between Baghdad and Erbil escalated in late May when the federal finance ministry suspended the transfer of funds, saying the KRG had exceeded its 12.67 percent share of the federal budget and failed to deliver oil to SOMO. The freeze left over 1.2 million regional public sector employees unpaid.
During the meeting, the KRG Council of Ministers “reiterated that the KRG continues to adhere to the mutual understanding between both sides, and within this framework, the federal government must disburse June salaries and later July salaries, similar to employees in other areas of Iraq.”
Oil exports from the Kurdistan Region through the Iraq-Turkey pipeline have been halted since March 2023 when 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 exporting oil independently in 2014.
Under the new Erbil-Baghdad agreement, the KRG must export its entire oil output through SOMO, retaining 50,000 barrels daily for local use. In return, Baghdad is expected to make budget transfers and provide refined fuel if needed.
But a final agreement between the KRG, the Iraqi government, and international oil companies operating in the Kurdistan Region on the future of Kurdish oil exports has not yet been reached.
During last week’s meeting, the KRG’s Council of Ministers asserted that it has “fully implemented all obligations” in the recent deal with Baghdad, a day after the Iraqi government decided to resume salary payments for the Region’s civil servants.
