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Iraq and KRG agree on resuming oil export via Turkey

Iraq asks Turkey to resume crude oil flow from Kurdistan region
3 min read
12 May, 2023
Authorities in the northern Iraqi Kurdish region say they have reached an agreement with the Iraqi federal government to allow the resumption of oil exports via Turkey.
Iraq is the second largest producer within the Organisation of the Petroleum Exporting Countries (OPEC). [Getty]

Crude oil exports from the semi-autonomous Kurdistan region to Turkey through the Kirkuk- Ceyhan pipeline will resume on Saturday, Iraq's oil minister said Hayan Abdel-Ghani said on Thursday.

"Iraq's State Oil Marketing Organization (SOMO) informed the Turkish company Botas of the resumption of export operations from Saturday," Abdel Ghani said in a statement.

He indicated that the resumption comes after contracts were signed with international companies for selling northern Iraqi crude according to SOMO measures. 

"The Kurdistan Regional Government (KRG) reached an agreement with the Iraqi federal government on measures to allow the resumption of oil exports through Turkey," KRG's Ministry of Natural Resources said in a statement on Thursday afternoon.

"On 10 May Iraq's State Oil Marketing Organisation (SOMO) officially requested Turkish authorities to allow the Kurdistan Region's oil exports via the country's Ceyhan port. Both the Kurdistan Region's Ministry of Natural Resources and Iraq's Ministry of Oil are reportedly waiting for Turkey’s response before resuming oil exports," it added. 

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Ankara stopped 450,000 bpd of exports from Iraq's north on 25 March after an international tribunal ruled in a nine-year-old dispute that Baghdad was right to insist on overseeing all Iraqi oil exports.

The tribunal run by the International Chamber of Commerce (ICC) ordered Turkey to pay Baghdad damages of US$1.5 billion for allowing the Kurdistan Regional Government (KRG) to export oil between 2014 and 2018 without the Iraqi government's consent.

Iraq is the second largest producer within the Organisation of the Petroleum Exporting Countries (OPEC).

According to a survey by S&P Global Commodity, Iraq's production in April fell by 290,000 b/d to 4.10 million b/d, the lowest in 20 months, due to the disruption of northern oil flows. The KRG ministry did not disclose further information on the deal.

Revenues from selling Kurdish oil will be paid into an account overseen by Baghdad, and a Kurd will be appointed as deputy director of SOMO, officials from the ruling Kurdistan Democratic Party (KDP) told local media outlets in April.

"The recent agreement between Baghdad and Erbil is not transparent; rather, it is personal… The KDP did not disclose the agreement's items to our committee members," Sarko Azad, a member of the Kurdistan Parliament's energy committee, told The New Arab on 19 April.

"When they (the Kurdish ruling parties) wanted to export oil independently from Baghdad in 2014, they sought authorisation from the Kurdistan parliament," Azad added. "But now, when the KDP agreed to SOMO to sell the Kurdish oil, they did not even consult our committee or the parliament in general."

Kurdish citizens feel that if Iraq's federal government will supervise exporting of the Kurdish oil, then their living conditions might become better as many people think that the KRG has failed to be transparent on where the oil revenues are going. 

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"The Kurdish ruling parties are stealing the incomes from selling oil; therefore, I hope Baghdad will export our oil and use it for public services," a KRG employee, speaking on condition of anonymity, told TNA

The KRG announced this week it will start distributing April salaries next week to nearly 1,250,000 employees.  The Iraqi federal government this week sent 400 billion Iraqi dinars as loans to the KRG to pay its civil servants.

The Iraqi parliament is expected to discuss the country's budget bill for this year and the next two years by next week. The Kurdistan region's share in the bill is more than 16 billion Iraqi dinars (nearly US$11 billion). That share could end the region's financial issues if the KRG respects its duties in terms of submitting its oil to SOMO.