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 exporting oil independently in 2014.
“According to the oil ministry’s request, since June 25, 2023, we have been delivering our oil to the oil ministry. Over 12 million barrels have been sent, and the oil ministry has not paid a single dinar or dollar to the [oil] companies,” Kamal Mohammed, the Kurdistan Regional Government’s (KRG) acting natural resources minister, told reporters in Sulaimani.
He expressed concern and lamented that Baghdad has not provided the guarantees requested by the oil companies.
Despite ongoing talks between Erbil, Baghdad, Ankara, and oil producers - with added pressure from the United States - the exports remain stalled, with their suspension costing Iraq billions of dollars in revenue.
The minister explained that the oil companies do not want their contracts to be altered.
“The companies now say that since our contracts are valid according to the federal government and international law, they must be implemented accordingly,” Mohammed said. “One of their demands is that their contracts must not be altered.”
On Sunday, oil producers in the Kurdistan Region called for increased efforts to resume Kurdish oil exports, regretting that “engagements thus far have been limited and unproductive” with the Iraqi government, despite Baghdad publicly stating that it is in favor of the resumption.
“We regret the lack of progress, nevertheless we will continue to push for a resumption [of] oil exports,” said Myles Caggins, spokesperson for the Association of the Petroleum Industry of Kurdistan (APIKUR).
In early April, APIKUR said that their investments have been “fundamentally harmed” by the closure of the pipeline and that they are in a “hurry” to resume the oil exports, for which they have been “at forefront to push negotiations with Baghdad.”
In early February, the Iraqi parliament approved amendments to the federal budget law, authorizing a $16-per-barrel fee for production and transport costs in the Kurdistan Region - a move seen as a crucial step toward restarting exports.
The amendments also require both the federal government and the KRG to establish an international technical consultancy within 60 days to assess production and transportation costs for oil fields in the Kurdistan Region. If an agreement cannot be reached, the federal council of ministers will appoint the consultancy.
