IOCs remain ready to discuss restoring Kurdish oil exports

ERBIL, Kurdistan Region - Following Iraqi Prime Minister Mohammed Shia’ al-Sudani’s meeting with US President Joe Biden at the White House on Monday, oil producers in the Kurdistan Region on Tuesday announced their readiness to continue discussions with Iraqi and Kurdish authorities to restore Kurdish oil exports.

The Association of the Petroleum Industry of Kurdistan (APIKUR) announced in a statement on Tuesday that it “remains ready to immediately continue discussions with Government of Iraq and Kurdistan Regional Government officials to restore exports through the ITP [Iraq-Turkey pipeline].”

This comes after 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 between the two leaders following their meeting on Monday.

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. 

“APIKUR member companies are intensely focused on cooperating with Government of Iraq and Kurdistan Regional Government officials to resume oil exports through the Iraq-Türkiye pipeline as soon as possible,” said APIKUR spokesperson Myles Caggins in the statement, while stressing that that the $10 investment of the oil producers in the Kurdistan Region “helps achieve” Sudani’s economic and energy goals discussed in White House meeting.

The lack of agreement to restore oil exports “has cost Iraq more than $14.5 billion in lost export revenues,” APIKUR said in a statement on Friday.

In the Tuesday statement, the oil association also emphasized the importance of “preserving the sanctity of current fiscal terms, and ensuring surety of past and future oil payments through formal written agreements.”

Last month, the Iraqi oil ministry blamed the international oil companies (IOCs) working in the Kurdistan Region for not reopening the pipeline, stressing that halting the process was not the decision of Baghdad and that the federal government is “the most affected” by the halt in exports.

The ministry’s accusation came in response to a statement by an IOC association in the Kurdistan Region which it labeled as a “blatant interference” in Iraqi affairs. 

The IOCs and the KRG are bound by Production Sharing Contracts (PSCs). Under the Kurdistan Region’s PSC model, the IOCs 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 the PSCs between the IOCs and the KRG are a violation of the Iraqi constitution, stressing that the contracts need to be amended into service contracts such as the ones in federal Iraq before exports could resume.

APIKUR claims that the KRG owes IOCs in the Kurdistan Region over $1 billion between September 2022 and March 2023. The piled-up debts are a result of the fact that many of the contracts with the IOCs signed in the early stages of the KRG’s independent oil sales were signed with prepayment schemes.