Erbil-Baghdad Talks Intensify Amid Oil Export Deadlock and Mounting Public Pressure Over Salary Delays

Peregraf

Efforts to resume oil exports from the Kurdistan Region have hit a major stumbling block as the Kurdistan Regional Government (KRG) and the federal government in Baghdad remain divided over who should repay nearly $1 billion owed to international oil companies operating in the region.

According to a source familiar with the negotiations, Baghdad has so far refused to shoulder the debt, despite repeated requests from the KRG. “The repayment of the debts of the oil companies has not been resolved yet, and Baghdad is not ready to repay them,” the source told Peregraf. “Efforts are continuing to reach an agreement on the resumption of oil exports.”

Since early this year, over ten bilateral meetings and several trilateral discussions involving oil companies have taken place, yet no breakthrough has been achieved. Talks have been ongoing in both Erbil and Baghdad for five consecutive days, under mounting pressure to find a solution.

Oil companies, for their part, have expressed readiness to resume exports on the condition that their past dues are paid and future payments guaranteed. They have proposed a staggered repayment plan, contingent on binding commitments from either the KRG or the federal government.

The impasse comes as public frustration grows in the Kurdistan Region, where civil servants are still waiting for their May salaries. Baghdad has linked the disbursement of salaries to the KRG’s compliance with budget requirements, including the delivery of oil and domestic revenues.

“There has been an understanding on the amount of revenue to be handed over to Baghdad,” the source said. “Now the issue of oil exports through SOMO is the main obstacle.”

According to the federal budget law, the KRG is obligated to deliver 400,000 barrels per day (bpd) to Iraq’s State Oil Marketing Organization (SOMO). Iraqi officials have proposed restarting exports at 185,000 bpd and gradually increasing the volume.

The Kurdistan Region currently produces about 300,000 bpd, most of which is consumed domestically. Oil exports from both the Kurdistan Region and Kirkuk through Turkey’s Ceyhan port have been suspended since March 2023, following a ruling by the Paris-based International Court of Arbitration in favor of Iraq.

APIKUR, a consortium representing oil companies operating in the region, estimates the halt has cost the KRG over $32 billion in lost revenue.

Despite repeated announcements by Iraqi officials—including Oil Minister Hayan Abdul Ghani, who in February promised an imminent resumption of exports—no oil has flowed through the pipeline in over two years.

A February 2025 amendment to the Iraqi budget law created a committee to evaluate the cost of oil production in the Kurdistan Region. Until the review is completed, Baghdad will compensate the KRG at a flat rate of $16 per barrel.

As negotiations continue, all eyes remain on whether a breakthrough can be achieved that satisfies oil companies, secures federal payments, and restarts the critical flow of Kurdish oil to international markets.