ERBIL, Kurdistan Region - Oil producers in the Kurdistan Region on Thursday welcomed a proposal to amend an article from the Iraqi federal budget law aimed at resuming the Region’s oil exports.
“APIKUR member companies welcome the Iraqi Parliament’s proposal to amend Article 12 of the Budget Law,” read a statement from the Association of the Petroleum Industry of Kurdistan (APIKUR) on X.
Last week, the Iraqi government approved a proposal to amend articles from the federal budget to authorize compensation to companies operating in the Kurdistan Region for oil production and transportation costs, setting the rate at $16 per barrel. The proposal - yet to be finalized by parliament - aims to resume oil exports from the Region.
Iraq’s three-year federal budget bill, passed in June 2023, had set the rate for one barrel of oil at $6.90 and international oil companies (IOCs) have requested three times that amount.
According to Article 12 of the federal budget law, the Kurdistan Regional Government (KRG) is obliged to hand over the non-oil revenues to the federal government, in return for the Region’s share in the budget.
Despite the government’s proposal to amend the articles, APIKUR believes “that there could be sufficient scope in the current wording to cover our previous requests related to commercial terms and surety of payment for past and future exports via the Iraq-Türkiye Pipeline.”
Oil exports from the Kurdistan Region through the Iraq-Turkey pipeline have been suspended since March 2023 after a ruling by a Paris-based arbitration court ruled in favor of Baghdad over Ankara, saying the latter had breached a 1973 pipeline agreement by allowing Erbil to export oil independently since 2014.
Before the halt, Erbil exported around 400,000 barrels per day through the pipeline, in addition to some 75,000 barrels of Kirkuk’s oil.
The KRG signed production-sharing contracts with international oil companies when it began its independent oil sector.. Under this model, the oil companies cover the entire cost of production while the KRG receives the lion’s share of the profits from successful projects.
Baghdad has repeatedly said that these contracts violate the constitution and must be amended to match the service contracts that the federal government prefers before exports can resume.
Setting a standardized cost per barrel has also been a point of contention between Erbil and Baghdad.
In late September, the finance committee of the Iraqi parliament and the KRG reached an initial agreement to review the Kurdish government’s contracts with international oil companies, with the goal of restarting oil exports
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