Peregraf
The Iraqi government and international oil companies have reached an agreement to resume oil exports from the Kurdistan Region, but the deal still requires the signature of Prime Minister Mohammed Shia’ al-Sudani. The Kurdistan Regional Government (KRG) says that the prime minister’s approval is now the final step—one that is directly tied to the disbursement of long-delayed civil servant salaries in the region.
Peshawa Hawramany, spokesperson for the KRG, said during a televised interview that “the matter has been finalized and submitted to the Iraqi Prime Minister for signature.” He added, “If he truly intends to send the salaries, he can sign it today and send the salaries for two months, not just one.”
The pending agreement, Hawramany clarified, is not directly between the KRG and Baghdad, but rather between the federal government and international oil companies operating in the Kurdistan Region. Once signed, it would pave the way for the disbursement of salaries. “Federal officials told us: ‘Once the agreement is signed, the salaries will be sent,’” Hawramany said.
The spokesman added that this time, any resumption of oil exports from the Kurdistan Region will be contingent on the payment of salaries. “This time, the resumption of exports depends on the release of salaries,” he stressed.
Talks between the federal government and oil companies have reportedly advanced. According to Hawramany, “The federal government has told the KRG delegation that they have reached an agreement, and the companies have said they are close to finalizing it.”
However, another sticking point remains unresolved: the handover of domestic revenues. While the federal government demands that the KRG remit around 150 billion Iraqi dinars per month—roughly half of its internal revenues—Hawramany said the KRG is only prepared to hand over around 50 billion dinars, which he claims represents 50% of federally-related revenues. “The Iraqi government is not satisfied with that,” he said.
Background: A Protracted Oil Dispute
The current deadlock is the latest development in a wider political and financial dispute that has severely impacted public finances in the Kurdistan Region. On June 30, Peregraf reported that efforts to resume oil exports from the region have stalled due to a fundamental disagreement over nearly $1 billion in unpaid debts owed to international oil companies.
While the KRG has repeatedly urged Baghdad to take responsibility for the debt, federal authorities have so far refused. A source familiar with the negotiations told Peregraf, “The repayment of the debts of the oil companies has not been resolved yet, and Baghdad is not ready to repay them.”
Despite more than ten bilateral meetings and several trilateral sessions with the involvement of oil companies, no breakthrough has emerged. Talks have continued in Erbil and Baghdad for five consecutive days amid growing pressure to reach a deal.
Oil companies have stated they are prepared to resume exports if their back payments are honored and future payments guaranteed. They have proposed a phased repayment plan contingent on binding commitments from either the KRG or Baghdad.
Growing Public Anger and Legal Complexities
The stalemate comes as public anger mounts in the Kurdistan Region, where civil servants are still waiting for their May salaries. Baghdad has linked salary disbursement to KRG’s compliance with federal budget terms, including the handover of oil and domestic revenues.
The 2023 Iraqi federal budget law requires the KRG to deliver 400,000 barrels per day (bpd) to the State Oil Marketing Organization (SOMO). Iraqi officials have proposed a phased restart of exports, beginning at 185,000 bpd.
Currently, the Kurdistan Region produces about 300,000 bpd, most of which is consumed domestically. Exports from the Kurdistan Region and Kirkuk via Turkey’s Ceyhan port have been halted since March 2023, following a ruling by the International Court of Arbitration in favor of Iraq.
The halt has cost the KRG over $32 billion in lost revenue, according to APIKUR, a consortium representing oil companies operating in the region.
Despite promises from Iraqi officials—including a February assurance by Oil Minister Hayan Abdul Ghani that exports would resume imminently—no oil has flowed through the pipeline for over two years.
A February 2025 amendment to Iraq’s budget law formed a committee to audit oil production costs in the Kurdistan Region. Until that review is completed, Baghdad will compensate the KRG at a fixed rate of $16 per barrel.
As negotiations intensify, the situation remains precarious. The Kurdistan Region’s ability to pay its employees—and Iraq’s ability to re-enter global oil markets through northern exports—hangs in the balance.