ERBIL, Kurdistan Region - Iraq’s oil ministry’s legal demands on contracts with international oil companies (IOCs) operating in the Kurdistan Region were “always political” and disagreements in Baghdad delayed a long-awaited breakthrough, an oil expert said earlier this week.
A tripartite deal was finally signed on Monday between the Iraqi government, the Kurdistan Regional Government (KRG), and the OICs to restart crude exports from the Kurdistan Region, which have been suspended since 2023.
Robin Mills, CEO of the UAE-based Qamar Energy, told Rudaw following the signing of the deal that the legal demands that Baghdad had regarding contracts with IOCs were “always political.”
He noted that while Iraqi Prime Minister Mohammed Shia’ al-Sudani’s office has wanted to finalize the deal as soon as possible and get the oil flowing amid revenue needs and excessive pressure from Americans, other political players “still regard the Kurdish oil sector as not operating under federal law and wanting to bring it under full control.”
The deadlock began to ease last month when Erbil and Baghdad reached a deal committing the KRG to export its entire output - about 230,000 barrels per day - through Iraq’s State Oil Marketing Organization (SOMO). Ali Nizar Faiq, director general of SOMO, told Rudaw on Tuesday that a tripartite agreement has reached its “final stages,” adding that the company is “waiting for pumping procedures after finalizing all details, and some matters will be documented in writing.”
Under the terms of the new deal, companies operating in the Kurdistan Region will receive crude oil instead of cash as part of their entitlements, an informed source told Rudaw English.
Amer Khalil, CEO of the North Oil Company under the federal oil ministry, told Rudaw on Saturday that Kurdish exports are expected to resume “in the next 48 hours.”
“Of course, we have heard that numerous times before,” Mills cautioned regarding the resumption of exports through Turkey. “We still have to be cautious.”
Reuters reported on Monday that Norway’s DNO - the Kurdistan Region’s largest producer - and its partner Genel Energy have yet to sign the agreement. DNO said in a statement on Tuesday that it “welcomes reports that an agreement has been reached” but did not clarify whether it had joined other IOCs in signing.
Mills noted that it is not unprecedented for IOCs in the Region to sign contracts with Baghdad, adding that “HKN has certainly been very active in putting its point of view [across] and trying to get this disagreement on oil exports resuming.”
Last month, Iraq signed a preliminary deal with US-based HKN Energy to develop the Hamrin oil field in Basra province, just hours after a drone strike targeted one of HKN’s oil fields in the Kurdistan Region and as financial disputes between Erbil and Baghdad remained high. The KRG at the time blamed Iraq’s Popular Mobilization Forces (PMF) for the attack.
Oil exports from the Kurdistan Region through the Iraq-Turkey pipeline have been halted since March 2023, when a Paris-based arbitration court ruled in favor of Baghdad, saying Ankara had violated a 1973 pipeline agreement by allowing Erbil to independently export oil starting in 2014.
Meanwhile, the KRG reportedly owes the IOCs about $1 billion in accumulated debts.
Nwenar Fatih contributed to this report.
