Peregraf
A delegation from the Kurdistan Regional Government (KRG) is in Baghdad to implement a recent understanding and address the obstacles hindering its execution, with meetings already underway. The Iraqi federal government has agreed to the resumption of the Kurdistan Region's oil exports, starting with the currently available, smaller quantities.
A source indicates that "an agreement on non-oil revenues is expected in the coming days, with a decision on salaries to be made on Sunday."
The agreement between the Kurdistan Region and Baghdad encompasses three main pillars: the resumption of oil exports, the handover of non-oil revenues, and the Tawteen of salaries, which refers to the nationalization of the public sector payroll system under federal supervision through designated banks. There is a "convergence of views" from both sides on the implementation of all three aspects, and it is anticipated that the upcoming week "will be the week of resolving the salary issue, at least until the end of this year."
On the morning of August 6, 2025, a technical delegation from the KRG's Ministry of Finance and Financial Supervision arrived in Baghdad and commenced meetings with the Iraqi Ministry of Finance.
An informed source in Baghdad told Peregraf, "The primary objective of the Kurdistan Region's delegation is to reach an agreement on the amount of non-oil revenue that the region must hand over for the month of June and subsequent months, as part of the implementation of the agreement between the Kurdistan Region and Baghdad."
The source added, "Efforts are being made to have the joint committee of the Kurdistan Region and Baghdad prepare and submit a report on the Kurdistan Region's non-oil revenues and the federal government's share to the Iraqi Council of Ministers by the upcoming Sunday, when the council is scheduled to convene."
"There is still no guarantee that the Kurdistan Region and Baghdad will reach an agreement on non-oil revenues in the next few days, as they have different perspectives on the matter. Iraq believes that half of the total revenue should be handed over, while the Kurdistan Region believes it is half of the federal revenues, which amounts to less than that. Both sides will need to compromise to reach an agreement," the Peregraf source stated.
On Tuesday, August 5, 2025, the Iraqi Council of Ministers convened and discussed the implementation of the understanding between the regional and federal governments. The Iraqi Prime Minister has given the delegations from the Kurdistan Region and Baghdad until the next meeting, scheduled for Sunday, August 10, 2025, to remove the obstacles to implementing the understanding.
Regarding the resumption of oil exports, the Iraqi Oil Minister has revealed that an agreement has been reached with the Kurdistan Region to hand over the currently available quantity of oil to the State Organization for Marketing of Oil (SOMO) for export through the Turkish port of Ceyhan.
Today, Hayyan Abdul-Ghani, the Iraqi Oil Minister, visited the North Oil Company in Kirkuk and announced, "The production volume from the oil fields in the Kurdistan Region that are still in production is approximately 130,000 barrels per day. 50,000 of this will be for domestic consumption, and an agreement has been made with officials in the Kurdistan Region to hand over the remaining 80,000 barrels to SOMO to be exported through the Turkish port of Ceyhan."
The Iraqi Oil Minister also stated, "Negotiations with the Kurdistan Region are ongoing, and communication with the Ministry of Natural Resources is continuous for the handover of oil and its export through SOMO. The resumption of oil exports is set for today or tomorrow."
According to Hayyan Abdul-Ghani, oil exports were supposed to resume today, "but the process of pumping oil requires an oil storage facility. The oil is collected in tanks and then intermittently pushed through a pipeline to the port of Ceyhan."
Based on the Iraqi Oil Minister's statements, the issue of oil delivery and its quantity has been resolved, which removes the biggest obstacle to sending the salaries of the Kurdistan Region's employees. There is also a convergence of views on non-oil revenues.
Another point of the agreement is the Tawteen of employee salaries, which must be completed within three months. KRG officials claim that the "My Account" project for banking salaries has been recognized by Baghdad and is considered as the implementation of Tawteen, although this has not yet been fully confirmed.
According to the latest data from the "My Account" team, "800,000" public employees in the Kurdistan Region have so far registered in the project, and the team says, "We are close to banking the salaries of all employees."
Some current and former Kurdish members of the Iraqi and Kurdistan parliaments believe that the federal government will not accept the "My Account" project in its current independent form. Rather, the KRG must send the information and data files of all salaried employees to the Iraqi Ministry of Finance, along with the banks where their salaries have been processed. Only then will their monthly salaries be deposited directly into their accounts. This view has not yet been confirmed.
On July 16, 2025, the KRG's Council of Ministers announced a new understanding with Baghdad on "securing the financial entitlements of the Kurdistan Region and its obligations" and decided to implement its content. The following day, the Iraqi Council of Ministers approved the understanding and made it a decision.
According to the understanding, the Kurdistan Region must hand over all produced oil, which is currently not less than 230,000 barrels per day. The KRG later announced that due to drone attacks, they are currently unable to deliver that amount of oil but are prepared to hand over whatever they have available.
Also, according to the understanding, the Kurdistan Region will hand over 120 billion dinars to the Iraqi federal government as the federal government's share of non-oil revenues for the month of May, and the amount for subsequent months will be determined by a joint committee.
Text of the Understanding Between the Erbil and Baghdad:
The Oil Handover File
1. The Kurdistan Regional Government will immediately begin handing over all produced oil from the region's fields to the State Oil Marketing Organization (SOMO) for export. The Federal Ministry of Finance will pay $16 (in oil or cash) for each barrel delivered, in accordance with the general budget law, provided that the delivered quantity of oil is not less than 230,000 barrels per day. Any increase in oil production must be determined and delivered through a joint measurement committee. If oil exports are halted for any reason, the total amount of the aforementioned oil will be delivered to the Federal Ministry of Oil.
(Clarification: The current total production is 280,000 barrels per day, according to reports from the Kurdistan Regional Government, of which 50,000 barrels are allocated for domestic use in the region. The remaining 230,000 barrels, along with any future increase in production, will be delivered to SOMO for export).
2. A quantity of 50,000 barrels of oil per day will be allocated for the Kurdistan Region's domestic use, provided that the Kurdistan Regional Government covers the costs of production and transportation. The revenue from the sale of oil products will be returned to the federal treasury, after deducting the costs of production, transportation, and refining. If the region needs more products, the Federal Ministry of Oil will provide it, on the condition that it does not exceed 15,000 barrels of crude oil per day. A joint committee from the Federal Ministry of Oil and the Ministry of Natural Resources of the Kurdistan Regional Government will be formed to determine the actual domestic needs of the region and will submit a report in this regard to the federal government for approval within two weeks.
The Non-Oil Revenue File:
1. The Kurdistan Regional Government, according to preliminary estimates, must hand over 120 billion dinars to the Federal Ministry of Finance as the federal treasury's share of non-oil revenues for the month of May 2025. This point is subject to change after auditing in accordance with point (2) below.
2. A joint evaluation committee from the Federal Ministry of Finance and the Federal Board of Supreme Audit, in coordination with their counterparts in the Kurdistan Regional Government, will classify, audit, and determine the federal government's share of non-oil revenues, starting from May 2025, based on the principle of auditing joint reports from the time the federal budget law came into effect. The committee will submit a report to the federal government for approval within two weeks.
3. Formation of a joint committee of both the federal and regional governments to complete the process of salary Tawteen in accordance with the decision of the Federal Supreme Court within a period of three months, after which salaries will only be paid via the Tawteen system.
4. A team will be formed from the Federal Ministry of Finance and the Federal Board of Supreme Audit, in coordination with their counterparts in the Kurdistan Regional Government, for the purpose of determining the rate of the region's excess in actual expenditures (infaq fi'li) and how to address it in accordance with the general federal budget law for 2023, 2024, and 2025. The team will submit a report to the federal government within two weeks.
5. The Federal Ministry of Finance will send the May salaries for the public employees of the Kurdistan Region after receiving confirmation from the Federal Ministry of Oil/SOMO of the receipt of the full specified amount of oil (currently 230,000 barrels per day) at the port of Ceyhan.
6. These decisions will come into force after their approval by the Council of Ministers.