Iraq and Kurds to sign agreement to resume northern oil crude exports to Turkey

Iraqi and Kurdish officials are expected to sign a deal in Baghdad on Tuesday to resume the exportation of crude oil from the Iraqi Kurdistan region to Turkey, sources told The New Arab.

The decision to stop shipments of 450,000 barrels per day (bpd) of crude relates stems from a legal case in 2014 when Baghdad claimed that Turkey violated a joint agreement by allowing the Kurdistan Regional Government (KRG) to export oil through a pipeline to the Turkish port of Ceyhan.

The International Chamber of Commerce on 25 March ruled in favour of Iraq.

Masrour Barzani, KRG's prime minister, will visit Baghdad on Tuesday and meet with Iraq's prime minister Mohammed Shia' al-Sudani to sign a deal for resuming Kurdish oil exports under the supervision of Iraq's State Oil Marketing Organisation (SOMO), a close source from the Kurdish ruling parties told The New Arab on condition of anonymity.

The Prime Minister of the Kurdistan Region (KRG) @masrourbarzani, will visit Baghdad tomorrow to discuss several issues, especially the oil and gas law. pic.twitter.com/rvwlw3xRrb

— Sarwan Wllatzheri (@SarwanBarzani_) April 3, 2023

The halt to exports had left foreign oil firms with nowhere to pump Kurdish oil and contributed to the rise of global oil prices.

The expected agreement between Baghdad and Erbil spells the end of independent oil exports by the KRG and marks a clear limit to its autonomy.

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. 

"Following several meetings between the Kurdistan Regional Government and the Federal Government, an initial agreement has been reached to resume oil exports through Ceyhan this week," the KRG's head of foreign media affairs Lawk Ghafuri wrote in a tweet on Sunday. 

"This agreement will remain in effect until the oil and gas law bill is approved by the Iraqi Parliament," Ghafuri added.

Local citizens who TNA spoke with all expressed relief that Iraq's federal government will supervise exporting of Kurdish oil, indicating that the KRG has failed to be transparent on where the oil revenues are going.  

"The 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 secrecy, told TNA. 

The employee was furious as the KRG for yet to begin distributing salaries for March to nearly a public sector payroll of nearly 1,250,000 people.

"SOMO must sell the Kurdistan region's oil, and the entire oil revenue across Iraq must return to one treasury," Bafel Talabani, head of the ruling Patriotic Union of Kurdistan (PUK), said in a statement on Monday. 

The Iraqi parliament is expected to discuss the country's budget bill for this year and the next two years early 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.