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ERBIL, Kurdistan Region - Turkey’s suspension of the Kurdistan Region’s oil exports has caused the Kurdish and Iraqi governments losses of about six billion dollars since March, the head of the Region’s foreign relations office said on Friday.
Turkey stopped the flow of Kurdish oil through the Iraq-Turkey pipeline after a Paris-based arbitration court on March 23 ruled in favor of Baghdad against Ankara. The court ordered Ankara to pay a penalty of $1.5 billion in damages to Baghdad for allowing the Kurdish authorities to independently export its oil between 2014 and 2018.
Safeen Dizayee, head of the Kurdistan Regional Government's Department of Foreign Relations, told Rudaw’s Diyar Kurda on the sidelines of the United Nations General Assembly in New York on Friday that “as Iraq has been trying to get the $1.5 billion, the suspension of the Region’s oil export has caused the Iraqi federal budget and Kurdistan Region nearly $6 billion loss since March.”
This is “mathematically illogical,” he added.
According to Dizayee, the Region had incurred $5 billion of losses by August 29.
About 400,000 barrels of oil were being exported daily by Erbil through Ankara before the halt, in addition to some 75,000 barrels from the federally-controlled Kirkuk’s fields.
Dizayee said that the Iraqi government does not have the authority to forgive Turkey regarding the $1.5 billion penalty “but probably needs a ruling from the parliament.”
“But there are other solutions. They can find a win-win solution,” noted the Kurdish official.
Erbil and Baghdad signed an agreement to resume the Region’s exports in April, but there is still no oil flowing through the pipeline to Turkey despite Ankara saying the pipelines, which were believed to be damaged by February’s strong quakes, are ready for oil flow.
In July, Turkish President Recep Tayyip Erdogan said in a press conference that the suspension of the Kurdistan Region’s oil exports was the result of problems between the federal government and the KRG and that Ankara had no issues with receiving the oil. Days later, Iraq’s oil ministry responded that Erbil and Baghdad are on the same page regarding the resumption of exports.
The KRG is heavily reliant on oil revenues and an inability to sell its crude has severely impacted its economy. It has not been able to pay its civil servants in full and on time for nearly a decade and lack of oil income has deteriorated the crisis. The public employees are yet to receive their July salaries.
Under Iraq’s 2023 budget, the KRG is obliged to sell 400,000 barrels of crude oil through Iraq’s national oil marketing body and if the export suspension continues, Iraq will take Kurdish oil for its internal use.
Iraqi Prime Minister Mohammed Shia’ al-Sudani said at the Middle East Global Summit on Wednesday hosted by Al-Monitor and Semafor in New York this week that Turkey’s failure to resume exports of Kurdistan Region oil violates a 1973 agreement.
“We are waiting for a signal from Turkey to resume exports, because its halt violates the original agreement between Iraq and Turkey in 1973,” he said.
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