ERBIL, Kurdistan Region – Halting Kurdistan Region’s oil exports is as damaging to Iraq as it is to the Kurdistan Regional Government (KRG), according to an energy analyst.
Baghdad has been an indirect beneficiary of the KRG’s independent oil sales, Maryam Salman, a consultant at Qamar Energy, told Rudaw.
“If Kurdistan’s exports are to remain offline, Baghdad will suddenly have to assume breach and reliability for meeting Kurdistan Region’s expenses,” said Salman, adding citing that Iraq may also have to assume responsibility for the KRG’s debts accumulated over the past decade.
Oil stopped flowing from Kurdistan Region’s fields to international markets via Turkey’s Ceyhan port after an arbitration court in Paris last week ruled that Ankara had breached a 1973 pipeline agreement between Iraq and Turkey that obliges the Turkish government to abide by instructions issued by Baghdad 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.
Erbil and Baghdad have yet to reach an agreement on resuming the export of some 450,000 barrels per day, leaving Erbil unable to make payments on $6 billion it owes to oil traders, Reuters reported.
Rudaw understands that the KRG owed between 1.6 to 1.7 billion dollars to the international oil companies operating in the Region in August 2022.
According to Salman, both sides can take advantage of the recent discussions between KRG and the federal government over the budget to arrive at an interim solution that would allow Kurdistan Region’s oil to flow again.
Regarding KRG’s debts to oil companies, Salman said it’s very unlikely that Iraqi Prime Minister Mohammed Shia al-Sudani would agree to take responsibility for them because it would cause tensions with “hardliners” in Baghdad.
The KRG is heavily reliant on oil revenues and an extended inability to sell its crude will severely impact its economy. The government has struggled for years to pay its over a million civil servants on time and in full.
By Azhi Rasul
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