ERBIL, Kurdistan Region - Breakthrough "in principle interim agreements" have been reached between the Iraqi federal government, the Kurdistan Regional Government (KRG), and a bloc of eight international oil companies (IOCs) to resume Kurdish oil exports, confirmed the companies on Wednesday. Kurdish authorities had already announced the deal.
The eight IOCs, which - along with the KRG - are responsible for over 90 percent of oil production in the Kurdistan Region, confirmed in a statement that they “have reached in principle interim agreements with the Government of Iraq (GOI) and the KRG to resume exports via the Iraq–Türkiye Pipeline.”
The statement came after the KRG announced that a final tripartite agreement had been signed between the three parties, pending Baghdad’s final approval.
A KRG spokesperson said on Wednesday that the exports of the Kurdish oil are expected to resume after 48 hours, adding that after Baghdad officially signs it only the technical part will remain.
However, a well-placed source familiar with the negotiations told Rudaw English that the Kurdish oil exports are set to resume within 72 hours of Baghdad’s formal signing of the agreement.
Oil exports from the Kurdistan Region through the Iraq-Turkey pipeline have been suspended since March 2023, following a ruling by a Paris-based arbitration court in favor of Baghdad. The court found that Ankara had violated a 1973 pipeline agreement by allowing Erbil to independently export oil since 2014.
Under the tripartite agreement, the KRG will deliver its oil to Iraq's State Oil Marketing Organization (SOMO) - which will handle the sales - in line with Iraq's 2023-2025 Budget Law.
A February amendment to that law set a temporary payment of $16 per barrel for production and transportation costs for the IOCs. However, it did not address repayment of an estimated $1 billion to the companies in outstanding debts.
Notably, the Wednesday statement by the IOCs emphasized that the “agreed on framework maintains the sanctity of existing contracts and provides surety of payment to IOCs” and should allow exports to restart "in the coming days." It further “provides a path toward longer-term arrangements.”
A key component of the deal is an agreement for the KRG and the IOCs to meet within 30 days to create a mechanism for settling the outstanding debts owed to the companies, which are estimated at $1 billion, the statement confirmed.
Russell Freeman, CEO of HKN Energy - one of the eight signatory IOCs - was quoted in the statement by the firms as lauding the interim agreement.
"We are confident and optimistic that a win-win solution has been found and once fully signed by all relevant stakeholders, crude oil exports from the Kurdistan Region of Iraq will soon resume through the Iraq-Türkiye Pipeline,” Freeman said.
The statement also credited Iraqi Prime Minister Mohammed Shia' al-Sudani and KRG Prime Minister Masrour Barzani for their roles in facilitating the agreement.
KRG spokesperson Peshawa Hawramani told reporters on Wednesday that while the latest agreements have wheeled things forward, “one to two [oil] companies had reservations, but it was not a big deal.”
Well-placed sources told Rudaw English on Wednesday that the Norwegian oil and gas company, DNO ASA, and the London-based Genel Energy who are the two non-signatories of the latest agreement.
DNO, in particular, is reportedly owed a disproportionately large share of the $1 billion in arrears.
