Crude oil exports from Iraq’s semi-autonomous region of Kurdistan have resumed, reaching a significant rate of 205,000 barrels per day (bpd). This development follows the resumption of oil flows via the Iraq-Türkiye Pipeline to the Turkish port of Ceyhan on September 27, 2023, after a prolonged halt of over two years due to disputes over revenue distribution between the federal Iraqi government and the Kurdistan Regional Government (KRG).
The restart of oil exports marks a pivotal moment for Kurdistan, which had seen its oil sales suspended since March 2023. The previous cessation stemmed from disagreements over who should authorize Kurdish oil exports and manage the associated revenues. After extended negotiations, a fragile three-party agreement was established involving the federal government in Baghdad, the KRG, and a coalition of foreign oil companies operating in the region.
Under the terms of the agreement, the KRG is now delivering approximately 190,000 bpd of crude oil to the Iraqi state marketing company SOMO. Additionally, Kurdistan is permitted to retain 50,000 bpd for local consumption. This arrangement was celebrated by Iraq’s federal government as a historic achievement, marking a significant step towards stabilizing the region’s oil sector.
Despite this progress, concerns loom over the sustainability of the agreement. Reports indicate that the federal government in Baghdad has not fulfilled its financial obligations to international oil companies, which are critical for covering operational costs and ensuring investment returns. According to the Kurdish news outlet Kurdistan24, this failure to adhere to the agreement could jeopardize the fragile consensus that allowed exports to resume.
The KRG has emphasized the necessity of maintaining stable exports to support the region’s economy, which heavily relies on oil revenues. The successful flow of oil through the Iraq-Türkiye Pipeline is crucial not only for Kurdistan’s financial stability but also for the broader economic relationship between the KRG and the federal government.
As the situation develops, observers will be closely monitoring the adherence to the agreement and the potential repercussions for both the KRG and Iraq’s federal government. The ability to maintain and expand oil exports will be vital for the economic future of Kurdistan, as it navigates complex political landscapes and the ongoing challenges of revenue sharing.
