Peregraf
The Kurdistan Regional Government (KRG) is currently awaiting a proposal from the Iraqi Oil Ministry directed towards oil companies, which would address the costs associated with the oil fields necessary for the resumption of oil exports. A trilateral meeting regarding this matter is anticipated to take place in the near future.
During a press conference, Dr. Omed Sabah, the Head of the Office of the KRG Council of Ministers, stated that the KRG has met all its obligations to facilitate the resumption of oil exports.
Dr. Sabah emphasized that it is the responsibility of the Iraqi Oil Ministry to present a proposal to the oil companies and persuade them to cover the actual costs of the oil fields located in the Kurdistan Region. He affirmed that the KRG is prepared to resume oil exports as soon as the Iraqi Oil Ministry compensates the companies for their legitimate expenses.
Regarding the potential amendment of oil contracts between the KRG and the oil companies, Dr. Sabah noted that the Kurdistan Region will continue to be the primary party in any contracts, even if there are modifications to the financial terms or types of agreements. Such changes would necessitate the agreement of the companies involved, and a collaborative understanding is expected. A meeting involving the KRG, the Iraqi government, and the companies is scheduled to occur soon, with the possibility of the Finance Committee of the Parliament participating to facilitate a constitutional resolution.
Since March 25, 2023, the export of oil from the Kurdistan Region and Kirkuk to international markets has been halted due to a ruling by the International Court of Arbitration in Paris, which arose from a complaint lodged by Iraq against Turkey. The cessation of oil exports has resulted in damages exceeding $20 billion for both Iraq and the Kurdistan Region.
The resumption of oil exports is also a priority for the United States and was a central topic during the meeting between the Iraqi delegation, led by Prime Minister Mohammed Shia' Al Sudani, and US Secretary of State Anthony Blinken on September 23, 2024, in New York.
Dilan Ghafoor, the head of the Foreign Relations Committee of the Iraqi Parliament, who participated in the meeting, informed Peregraf that the United States is keen on resuming oil exports from the Kurdistan Region. "Blinken urged that the issues hindering oil exports be addressed, aiming for a resumption by the end of this year."
Conversely, Mohammed Shia Sudani articulated Iraq's intention to restart oil exports and detailed the challenges involved in this process. "The Prime Minister indicated that there are two main issues: firstly, oil companies are demanding repayment of their outstanding debts, which both the Kurdistan Region and Iraq are unable to settle; secondly, there is a need to revise the oil contracts. While the Kurdistan Regional Government is amenable to this, the companies remain dissatisfied," Ghafoor stated.
The primary challenge regarding the amendment of oil contracts pertains to the payment of production costs and the financial obligations owed to international companies operating in the Kurdistan Region's oil sector. The Iraqi government is dissatisfied with the partnership-type contracts that the KRG has established with these companies. Iraq seeks to lower the agreed payment per barrel of oil between the Kurdistan Region and the oil companies, and various proposals have been put forth. However, Iraq has yet to persuade the companies to accept these changes.