Efforts to restart oil flows from the Kurdistan Regional Government (KRG) have failed for the second time this week. Talks aimed at resuming exports were delayed multiple times, with the latest setback occurring on Thursday. Initially scheduled for Tuesday, the discussions were postponed due to disagreements between oil companies and the Iraqi Oil Ministry.
For the first time, a representative from the US embassy in Iraq attended the talks, according to Reuters. The discussions had initially been planned for Sunday, but the failure to reach an agreement on key issues, especially payment arrangements for international oil companies operating in the KRG, caused a delay.
The Iraqi Oil Ministry had invited oil firms from the Association of the Petroleum Industry of Kurdistan (APIKUR) to attend a crucial meeting in Baghdad. This meeting aimed to address regulatory concerns and enhance collaboration between all involved parties. The Ministry also extended an invitation to the KRG’s Ministry of Natural Resources to participate in the talks. These discussions are critical for resolving ongoing issues and restarting oil exports.
The suspension of oil exports has had a severe financial impact on Iraq. In February, Iraqi Foreign Minister Fuad Hussein stated that Baghdad and the KRG were working together to resolve technical issues and resume crude oil exports. These exports have been suspended for nearly two years, costing Iraq approximately $19 billion in lost revenue.
Iraqi Oil Minister Hayan Abdul-Ghani also confirmed in mid-February that the KRG would soon restart oil exports. Baghdad expects to receive approximately 300,000 barrels per day from the Kurdistan region once exports resume. The Iraqi parliament passed a budget amendment earlier this year, ending the conflict between the KRG and federal government over oil.
This amendment ensures that the KRG will be reimbursed for its expenses related to oil production and transportation. The legal challenges surrounding these oil flows stem from a ruling by the International Chamber of Commerce (ICC) in Paris. The ICC found that Turkey had violated a 1973 treaty by permitting KRG oil exports without Baghdad’s approval. This ruling halted oil shipments and required Turkey to pay Iraq $1.5 billion in compensation for losses incurred from 2014 to 2018.
The ongoing efforts to restart oil exports from the KRG are crucial for Iraq’s economy. However, technical, financial, and legal challenges continue to delay the resolution of these issues.