Kurdistan and Baghdad Reach Tentative Oil Export Agreement

The Kurdistan Regional Government (KRG) and the Iraqi federal government in Baghdad have announced a preliminary agreement aimed at resuming oil exports from the Kurdistan Region, which have faced significant disruptions in recent months. On Wednesday, the KRG’s Ministry of Natural Resources revealed that a new export protocol has been signed by 23 representatives, including 17 delegates from Iraq’s Oil Ministry. This agreement outlines a framework for oil exportation, although its practical implementation remains contingent on further developments.

According to the newly established protocol, the KRG will retain 50,000 barrels per day for domestic consumption while transferring the remainder to the State Oil Marketing Organization (SOMO). Despite this seemingly positive step, the deal is shadowed by a major obstacle: Baghdad must secure approval from Turkey to reopen the Iraq-Turkey pipeline. This pipeline has been inactive since March 2023, following a ruling from a Paris arbitration court that has left the flow of oil in limbo.

Baghdad has reiterated its commitment to purchasing 230,000 bpd from the Kurdistan Region under an agreement reached in July. In exchange, the federal government has pledged to resolve the long-standing issue of delayed public sector salaries within the KRG. To date, the federal government has disbursed 975 billion dinars (approximately $737 million) to cover wages for May. However, salaries for June and July are still pending due to ongoing “technical and financial disputes,” which remain largely undefined.

Negotiations between Erbil and Baghdad have continued since July, reflecting a pattern of past discussions that have often ended without a definitive resolution. The lack of clarity and persistent challenges have led to skepticism about whether this latest agreement will produce tangible results. Until Turkey authorizes the reopening of the pipeline, the agreement remains a tentative step forward, joining a series of previous negotiations that have failed to materialize into concrete actions.

The complexities surrounding the oil export agreement highlight the ongoing tensions between the KRG and the federal government in Baghdad. Both sides have expressed optimism, yet the reality of implementing these terms will depend heavily on external factors and continued dialogue. With the region’s economic stability at stake, stakeholders will be closely watching how these developments unfold in the coming weeks.