ERBIL, Kurdistan Region - The international oil companies operating in the Kurdistan Region said on Sunday that the Iraqi government’s efforts to amend the federal budget law are positive but set the provision of a written agreement as a precondition for the restart of Kurdistan Region’s oil exports.
Earlier this month, 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.
Myles Caggins, spokesperson for the Association of the Petroleum Industry of Kurdistan (APIKUR), told Rudaw late Sunday that they see the amendment as a “good step” but “Before we begin exporting oil, we must have written agreements.”
“So right now, we are seeing the political law, the budget law, Article 12 of the budget law in Parliament. After that, we need to have written agreements, and each individual company must agree to these terms under the new contracts,” he said.
The following is the full interview with Caggins:
Rudaw: Welcome Mr Caggins. What is the purpose of this US trade delegation’s visit to the Kurdistan Region? To what extent can they play a role in the issue of resuming oil exports?
Myles Caggins: Good evening. It's good to be back in Kurdistan. And I'm glad that your network is continuing to cover these very important economic issues. This is my first time in the studio at 11 p.m. This is the power hour. It's good to see you. This is wonderful.
For the past year, I have been talking to Rudaw and all of your viewers about this issue related to oil in Iraq's Kurdistan Region. And we are now beginning to see progress to get the pipeline reopened. And this progress is happening because the KRG and government of Iraq are working together, and we believe that the budget amendment will meet the terms that our companies are looking for to restore petroleum exports.
Mr Caggins, we are also happy to have you here… The Iraqi government says it is studying details for the resumption of Kurdistan Region’s oil exports. How do you see this? What would these details be?
Well, we have currently there's a business delegation. This is what you're asking about, these American businessmen who are here. And there is an organization called the United States Kurdistan Business Council.
My friend David Tafuri is leading this organization. And I want all of the viewers who are watching tonight to know that there are American businesses that are interested in Kurdistan Region and we have groups like the US-Kurdish Business Council that are bringing people from different industries. This includes agriculture, manufacturing, technology, and military sales. And these groups are coming to Kurdistan Region. They're having high-level meetings with the prime minister, president, and also leaders of businesses in Dohuk, Erbil, and Sulaimani.
What's more important, though, is that these business people get the understanding that Kurdistan Region is different than all of Iraq. Kurdistan region is different than other places in the Middle East. And the relationship between Kurdish people and Americans is strong.
And when the businesses know that they can come here to an environment where they are welcome, and when they meet our young people who are so smart, they are capable and ready to work, and when they see the natural resources, including land and oil and gas and water,
These businesses, they are likely to invest here in the region.
Is the $16 that Iraq has allocated for each barrel of oil satisfactory to APIKUR, or are you insisting on the previous price?
On the oil situation, we think that the oil discussions are going in the right direction. We think that this budget proposal from the Iraqi Parliament will be an important step to restore oil exports, and we want to ensure that our companies are able to receive direct payments for the oil that is sold.
Before March of 2023, when the pipeline was shut down, we, the oil companies, were receiving payments through political processes. We do not want payments for a political process. We want to sell the oil through SOMO at Ceyhan Port and to receive direct payment.
Before we begin exporting oil, we must have written agreements. So right now, we are seeing the political law, the budget law, Article 12 of the budget law in Parliament. After that, we need to have written agreements, and each individual company must agree to these terms under the new contracts.
To what extent would the $16 suggested by Iraq facilitate the restarts of Kurdish oil exports?
I think the question was how long will it take for exports to resume. We have been producing oil for local sales for the past year, and our wells, our oil production sites, are already online. A few things have to change right now all of the oil is moved through trucks, so now we will have to move oil into the pipeline and the pipeline will of course export it from Fishkhabur through Turkey and to the Ceyhan port, but our companies are ready to go and ready to make that transition after there is a written agreement. And of course, this process will be a orderly process. It's not going to be turn the pipe on and there's oil everywhere. This will be coordinated through the Ministry of Natural Resources and each of the international oil companies.
Regarding the amendment to contracts, is there any new initiative or you still think it should be in coordination with the Kurdistan Region?
This is about coordination and transportation. Is that the question? Okay. The process that we have now is for local sales of oil and that oil is trucked and there … each of the companies are selling locally to authorized vendors. These are companies that are registered and approved by the Ministry of Natural Resources.
And I must say, I give a commendation. We are thankful to the efforts of Dr. Umed [Sabah] and the Ministry of Natural Resources team. They are working very hard with their counterparts in Baghdad to resolve this issue.
And I think it is the effort that we have seen from the companies and the ministries to now have
this important meeting last week between [Iraqi] Prime Minister [Mohammed Shia’] Sudani and [Kurdish] Prime Minister [Masrour] Barzani, where they both spoke together. They spoke with one voice, and they said that restoring exports is beneficial for all of the people of Iraq.
Of course, at APIKUR, we agree, and this is why we have been pushing, pushing, pushing on behalf of our employees. We have more than 80% employees who are Kurdish, and all of the people in this region who have welcomed our companies to do business here.
Have you been invited to attend a meeting with Erbil and Baghdad?
On the budget amendment, we think the budget amendment is a good step forward. Our companies have reviewed the proposed language, and we believe that if this law passes, that it provides enough compensation to meet our fiscal terms. We are in the business to, of course, make money, and with that money we are able to provide more revenue into the government of Iraq and Kurdistan Regional Government.
Well, have you been given any assurances regarding your financial entitlements?
We are waiting to see final written agreements, and that will be an important step before we resume the export of oil… The discussions are good. The budget law, Article 12, that looks good, but we are actually going to need to see final documents that are agreed between the international oil companies, KRG, and government of Iraq.
Do you think it is realistic to expect the oil exports to resume before the New Year?
We think that today as I sit here with you in the studio there is as we say in American English light at the end of the tunnel. We believe that the discussions, the budget law are moving in the right direction, and we are getting closer.
But I don't want to create false hope and too many expectations. Each thing requires a step. First, the budget law, then a review of the written proposals, and then signatures, and then we will have exports going. And that will be a very good day when we can announce to Rudaw television and the world that Kurdistan Region is now again providing one-half of 1%, 0.5% of the global oil into the world markets. We think that is important for this region.
How much does the Kurdistan Regional Government owe you from your financial entitlements?
Since the beginning of the closure of the pipeline in March 2023, this has cost about one billion dollars a month. So almost $22 billion has been lost in revenue. We want to flip that around. We want there to be more revenue coming in. And the reason why exports through the pipeline is important is because the oil we sell on the global market is at about $75- $80 per barrel.
The oil we sell locally is only around $30 to $35 per barrel. And so to make the most revenue, we need to sell the oil globally, and then that will help provide funding for programs that benefit the people of Iraq. I know the Prime Minister [Barzani] has announced a program to have electricity in industrial areas. We have seen improvements in roads and infrastructure and dams and bridges. These programs are funded based on oil revenue because oil revenue is 80% of the economy here. The member companies of APIKUR want to be a positive contribution to help all of the people of Kurdistan region.
Mr Myles Caggins, APIKUR spokesperson, thank you so much.
Before coming to the studio he told me he lives in New York, but considers the Kurdistan Region as his second home. What made you have this feeling?
I, of course, served here in the military in 2019, and now I have come back and I have personal and professional relations with Kurds here in Kurdistan Region, also in Rojava and Bakur, Rojhelat, and around the world.
And I have my own company. My company is beginning to do business with the US military. And, of course, we are working with oil companies. And I right now have two Kurdish employees and look forward to growing the staff in 2025. This is Kurdistan. [It] is like home for me.
