Oil Agreement Between Erbil and Baghdad to Be Renewed as Kurdistan Exports Top 200,000 bpd

Peregraf – Hamdi Shingali, Deputy Director of Iraq’s State Oil Marketing Organization (SOMO), said on Saturday that the oil agreement between the Kurdistan Regional Government (KRG) and the federal government in Baghdad will be renewed, stressing that the deal has so far proceeded without obstacles and that oil exports from the Kurdistan Region are continuing normally. 

Shingali explained that the current agreement was concluded within the framework of Iraq’s General Budget Law, which is set to expire at the end of this year, noting that discussions are underway to extend it. “There have been no problems so far, and oil continues to flow as before,” he told reporters.

According to Shingali, oil exports from the Kurdistan Region have exceeded 200,000 barrels per day, expressing optimism that export volumes will continue to rise in the coming period.

Exports from the Kurdistan Region resumed on September 27, 2025, after a suspension of nearly two years. The halt began in March 2023 following an international arbitration ruling against Ankara, which cut off around 230,000 barrels per day from global markets and deprived the KRG of a major source of revenue.

Despite the resumption of exports, financial challenges persist in the Kurdistan Region. Baghdad has yet to transfer monthly salary allocations on time, and salaries for October have not been distributed, leaving more than 1.2 million public-sector employees waiting.

Under the renewed arrangement, crude oil produced in the Kurdistan Region—excluding quantities designated for domestic consumption—is delivered to SOMO at the Peshkhabour point, before being transported through the Iraq–Türkiye pipeline to the Turkish port of Ceyhan. Oil revenues are deposited into Iraq’s federal treasury, from which the Kurdistan Region’s financial share is allocated to cover public-sector salaries and other obligations.

The agreement also includes a cost-recovery mechanism, setting $16 per barrel for production and transportation costs. Oil companies operating in the Kurdistan Region are compensated in crude oil rather than cash. SOMO continues to pay transit fees, while the federal government is engaged in negotiations with Ankara to renew the pipeline agreement, which is due to expire in mid-2026. 

Iraqi leaders have described the resumption of oil exports as a significant milestone in relations between Baghdad and Erbil. Prime Minister Mohammed Shia’ al-Sudani called it “an achievement 18 years in the making,” while KRG Prime Minister Masrour Barzani welcomed the development as “a historic step” toward restoring financial stability and ensuring the regular payment of salaries in the Kurdistan Region.