The United States has called on Iraq to address outstanding financial obligations to American oil companies operating in the Kurdistan Region. During a phone call between Iraqi Prime Minister Mohammed Shia’ al-Sudani and US National Security Advisor Mike Waltz on Sunday, Waltz urged Baghdad to cooperate with the Kurdistan Regional Government (KRG) to resolve contract disputes and clear the arrears owed to US energy companies working in the region’s oil fields.
In his post on X, Waltz emphasized the importance of resolving these issues, encouraging the Iraqi government to welcome more Western and US energy companies into Iraq’s oil and gas sectors. This call for cooperation comes as Baghdad and Erbil continue their discussions on resuming Kurdish oil exports, which were halted nearly two years ago.
The Kurdistan Region’s oil producers, represented by the Association of the Petroleum Industry of Kurdistan (APIKUR), have expressed readiness to resume oil exports immediately once Baghdad and Erbil meet their agreed-upon terms. APIKUR, representing eight companies responsible for around 60% of Kurdish oil production, stated in a meeting with Iraqi federal and KRG officials that “fair and transparent agreements” are essential for the resumption of exports.
The oil producers laid out their requirements during the meeting, emphasizing the need for formal agreements to ensure they are paid for both future deliveries and unpaid oil from October 2022 to March 2023. They also demanded guarantees for payment security and transparency in the implementation of Iraq’s budget law.
A key issue highlighted by APIKUR is the new amendment to Iraq’s Federal Budget Law passed in February, which adjusts the reimbursement for production and transportation costs. Initially valued at $6 per barrel, the new cost is set at $16 per barrel in the first phase, with plans for an independent technical consultant to assess extraction costs. APIKUR insists that the terms of their existing contracts must be respected and that the work scope of the consultant must be agreed upon by all parties.
The Kurdish oil exports through the Turkish Ceyhan pipeline were halted in March 2023 following a ruling by a Paris-based arbitration court, which found Turkey in violation of a 1973 agreement by allowing the KRG to sell oil independently from Baghdad. This disruption has cost Iraq and the Kurdistan Region over $27 billion in lost revenue.
After months of negotiations, Baghdad and Erbil reached a new agreement in late February to restart oil exports through the Ceyhan pipeline, offering hope for economic recovery in both regions. The US continues to urge both governments to resolve their differences and ensure payments are made to the American oil companies operating in the Kurdistan Region.