KRG oil exports halt ‘temporary;’ salary distribution unaffected: Official

Julian Bechocha

ERBIL, Kurdistan Region - The halt of independent oil exports by the Kurdistan Regional Government (KRG) through Turkey is “temporary” and will only persist until a probable mutual agreement is reached between Erbil and Baghdad, an assistant to the Region’s prime minister said Sunday while affirming that the distribution of salaries will not be impeded. 

“It is true that oil exports have been halted, but this is a temporary situation because we have good relations with the Iraqi government and the government of [Iraqi Prime Minister] Mohammed Shia’ al-Sudani,” Rebaz Hamlan, assistant to Kurdistan Region Prime Minister Masrour Barzani and former KRG finance minister, told Rudaw’s Sangar Abdulrahman. 

The International Chamber of Commerce in Paris decided on Thursday in favor of the Iraqi government against Turkey in regards to KRG’s oil exports through Turkey’s Ceyhan port, placing Iraq’s State Oil Marketing Organization (SOMO) as the only party in charge of the management of export operations through the port, Baghdad announced. 

Iraq’s oil ministry welcomed the verdict in a statement on Saturday while Turkey told Kurdish authorities that it had halted imports and would wait for Baghdad’s permission to resume.

“Salary distributions will continue and the revenues of the KRG will firstly be assigned to the distribution of salaries before anything,” Hamlan affirmed when being asked about the prospect of salary cuts – a reality faced by citizens of the Region amid economic hardship during the war against the Islamic State (ISIS). 

The arbitration court ruled that Ankara had breached a 1973 pipeline agreement between Iraq and Turkey that obliges the Turkish government to abide by instructions issued by Iraq regarding the transport of crude oil exported from Iraq. In 2014, the KRG began using the pipeline to send its crude to Turkey’s Ceyhan port, to the ire of Baghdad.

“There is a mutual understanding and agreements are in place and for sure the Kurdistan Region will continue selling oil,” Hamlan added while stressing that a final resolution to the situation lies in the formation of an oil and gas law. 

A delegation from the Kurdistan Region directed by Barzani arrived in Baghdad on Sunday for discussions in attempts to overcome the arbitration ruling. 

The KRG is heavily reliant on oil revenues and an inability to sell its crude will severely impact its economy. The government has found hardships for years to pay its over a million civil servants on time and in full. 

Tensions between Erbil and Baghdad have been high over the past months due to disagreements over the legality of the Kurdistan Region’s oil and gas law and the Region’s share of the federal budget.

The Iraqi cabinet approved the federal budget bill for the years of 2023, 2024, and 2025 earlier in March, with Sudani stating that Erbil and Baghdad have reached an all-encompassing agreement to resolve outstanding issues.