Baghdad asks Erbil to hand over oil to resume exports

ERBIL, Kurdistan Region - Iraq’s Oil Minister on Wednesday said that Baghdad has officially sent the Kurdistan Regional Government (KRG) documents asking for the oil produced in the Region to be handed over to Iraq’s State Organization for Marketing of Oil (SOMO) in order to resume Kurdish oil exports through Turkey.

“We have sent a letter to the KRG asking them to hand over the oil produced in these [The Kurdistan Region’s] oil fields to the oil marketing firm, SOMO,” Iraq Oil Minister Hayyan Abdul Ghani told Rudaw’s Diyar Kurda in Washington.

 “We have asked them [KRG] to handover this oil to export it through the Iraq-Turkey pipeline to Ceyhan port,” he added.

Oil exports from the Kurdistan Region through the Iraq-Turkey pipeline have been halted since March 2023 after a Paris-based arbitration court ruled in favor of Baghdad against Ankara, saying the latter had breached a 1973 pipeline agreement by allowing Erbil to begin independent oil exports in 2014. 

Despite several talks between Kurdish, Iraqi, and Turkish officials, the exports have yet to resume and many international oil companies have suspended production.

Before the halt, around 400,000 barrels a day were being exported by Erbil, in addition to some 75,000 barrels of Kirkuk’s oil.

Article 13 of the Iraqi federal budget obliges the Kurdistan Region to hand over, on a daily basis, at least 400,000 barrels of crude oil to Iraq’s State Oil Marketing Organization (SOMO) to be exported through Turkey’s Ceyhan port, or be used domestically in case it is not exported.

Before the halt, Erbil was exporting around 400,000 barrels a day through Turkey, in addition to some 75,000 barrels of Kirkuk’s oil.

The loss of billions of dollars of oil revenue, the main source of income for the KRG, has worsened the financial situation in the Region and left the government unable to pay its public sector employees without assistance from Baghdad.

Iraq’s top court in February ruled that the Kurdistan Region’s oil and non-oil revenues must be handed over to Baghdad and all salaries are to be paid directly by the federal government, rather than by Erbil.

Ghani said a mechanism to hand over and export oil has been agreed on by both Erbil and Baghdad in December.

The oil minister is currently part of the delegation led by Iraqi Prime Minister Mohammed Shia’ al-Sudani in Washington DC. During the visit, Sudani met with US President Joe Biden and other governmental officials as well as energy and security firms.

During their meeting, US President Biden and Prime Minister Sudani “affirmed the importance of ensuring Iraqi oil can reach international markets and expressed their desire to reopen the Iraq-Turkiye Pipeline,” according to a joint statement by the two leaders following their meeting on Monday.

On Tuesday, Spokesperson for the Iraqi government Bassem al-Awadi told Rudaw that Baghdad is “optimistic” about the restart of Kurdistan Region’s oil exports, adding that the resumption of the process is one of the federal government’s priorities.