Tishwash: Iraq announces resumption of Kurdistan oil exports after more than two years of halt
The Iraqi government announced on Thursday an agreement to resume crude oil exports from the Kurdistan Region after a halt of more than two years.
The agreement stipulates that the regional government will immediately begin handing over all oil produced from the region’s oil fields to the State Oil Marketing Organization (SOMO) for export, with the quantity delivered not being less than 230,000 barrels per day.
The federal Ministry of Finance will pay the regional government $16 per barrel, according to Agence France-Presse.
The Ministry of Oil announced last February the completion of all procedures for exporting oil produced in the Kurdistan Region via the Turkish port of Ceyhan, following a two-year halt due to disputes between Baghdad and Erbil. At the time, the ministry said in a statement that oil exports would be conducted “in accordance with the mechanisms outlined in the budget law and its amendments, and within Iraq’s production ceiling set by OPEC.”
Türkiye halted the pipeline in March 2023 after the International Chamber of Commerce ordered Ankara to pay $1.5 billion to Baghdad in compensation for unauthorized exports between 2014 and 2018. link
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Tishwash: May salaries will be paid, and June salaries will be paid in the coming days. The Council of Ministers approves the memorandum of understanding with Kurdistan.
The Iraqi Council of Ministers approved the memorandum of understanding signed between Erbil and Baghdad regarding the salaries of employees in the Kurdistan Region.
Al-Jabal’s correspondent in Baghdad reported on Thursday that the Iraqi Council of Ministers approved the memorandum of understanding signed with the Kurdistan Regional Government regarding employee salaries, directing the release of employee salaries for one month.
The Iraqi Council of Ministers held an extraordinary session, chaired by Council Speaker Mohammed Shia al-Sudani, to discuss the agreement with Kurdistan on salaries.
According to information obtained by this correspondent, approval has been given to disburse salaries to Kurdistan Region employees for May as an initial phase, with June salaries to be disbursed in the coming days.
He said the extraordinary session was dedicated to discussing this issue. The Kut mall fire was included in the meeting’s agenda, and a three-day mourning period was declared in Iraq for the victims. link
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Tishwash: Iraq Agrees Oil Plan With Kurdistan as Export Deal Nears
Iraq approved a plan for its semi-autonomous Kurdish region to transfer oil to Baghdad, a key step toward resuming exports that have been halted for more than two years.
The Kurdistan Regional Government will supply Iraq’s state oil marketer SOMO at least 230,000 barrels a day for export, the federal government said after a meeting of the cabinet. On receiving the crude at Turkey’s Mediterranean port of Ceyhan, the export point of Kurdish oil, Baghdad will release funds for salaries of Kurdistan government employees.
The move is the strongest signal yet that a resumption of shipments from Kurdistan to global markets through a pipeline that was halted in March 2023 is near. A final deal would still need contracts with companies in the Kurdish region, which have said exports can only kick off when there’s clarity on compensation, including future payments and past dues.
Also read: Oil Firms in Kurdistan Await Deals as Iraq Nears Export Restart
The Iraq-Kurdistan agreement is “an important milestone toward the resumption of oil exports through the Iraq-Turkey pipeline,” said Myles B. Caggins III, spokesman for the Association of the Petroleum Industry of Kurdistan. The group’s members anticipate additional discussions with the governments “to establish written agreements, prior to resuming exports,” he said.
The companies would also have to bring online fields that were shut this week following a barrage of drone attacks. About 200,000 barrels a day of output has been halted, according to an official in the Kurdistan Regional Government.
The latest steps come just as the Organization of the Petroleum Exporting Countries and its allies have started boosting production quotas, giving some members the room to raise exports. Additional shipments would likely add to a supply surplus forecast for later this year.
Pipeline Closure Halted About 500,000 Barrels a Day of Iraqi Oil Flows
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Iraq-Ceyhan pipeline
The amount of oil that will be handed over to SOMO is based on output of 280,000 barrels a day. Kurdistan will keep 50,000 barrels a day for its own requirements. Any increase in output will result in a higher share going to the federal government, Iraq said in the statement.
As part of the deal, the KRG will also pay 120 billion Iraqi dinar ($92 million) as an initial payment to the federal government as its share of non-oil revenues for May. A panel will be formed to determine the state’s future share.
Lost Revenue
Iraq is OPEC’s second-biggest oil producer, pumping the vast majority of its crude from the south. The country has been keen to increase output in the long-term and boost revenue after years of war and internal strife. The halted Kurdistan exports have resulted in about $25 billion in lost revenue, Kurdistan Regional Government Prime Minister Masrour Barzani said last month.
The pipeline saga started in early 2023 after Turkey halted the link that carried about half a million barrels of oil daily following an arbitration court’s order to pay Iraq $1.5 billion. Ankara had claimed the pipeline was shut because it needed repairs after two massive earthquakes in February that year, but later put the onus on Baghdad to restart operations. But financial and legal disagreements held back the resumption.
In February this year, Iraq’s parliament passed a plan to allow Baghdad to pay oil companies in Kurdistan an initial fee of $16 a barrel for production and transportation, which is higher than what it had proposed paying earlier.
Oil companies including DNO ASA, Genel Energy Plc and Gulf Keystone Petroleum Ltd. operate in the Kurdistan region. link
