Iraq is the second largest producer of OPEC and exports an average of 3.3 million barrels of crude per day. Oil represents 90% of the country’s income.
On Wednesday, the Iraqi Oil Minister expressed his hope that an agreement would be reached soon that would allow the resumption of crude exports to Turkey from the autonomous Kurdistan region, after it was interrupted for more than a month due to an old legal dispute.
Iraq had initiated arbitration proceedings with neighboring Turkey in 2014 at the International Chamber of Commerce in Paris, against the background of Ankara importing oil for a long time from Iraqi Kurdistan without the approval of the federal authorities in Baghdad.
This year, the arbitral tribunal issued its decision in favor of Baghdad and obligated Turkey to pay compensation to the Iraqi state.
This led Ankara to stop oil imports from Iraqi Kurdistan.
However, at the beginning of April, Baghdad and the regional authorities concluded a “temporary” agreement to settle some points of contention and establish an export mechanism supervised by the federal government, although some issues remained pending.
“With regard to the agreement with the region… God willing, within a week or two at the latest, we will reach a final agreement regarding the resumption of crude oil exports,” Iraqi Oil Minister Hayan Abdul-Ghani said on Wednesday, stressing that “the indications are positive.”
Speaking at the “Iraq Forum” organized by Iraqi research centers and institutes, Abdul-Ghani referred in particular to the “examinations conducted by the Turkish side of the pipelines” to avoid possible oil leaks after the devastating earthquake that struck Turkey in February.
Under the terms of the agreement announced at the beginning of April, oil sales from Kurdistan must pass through the Iraqi state oil company (SOMO), and not exclusively through the local Kurdish authorities.
It also provides for the deposit of Kurdish export revenues into an account run by the local authorities in Kurdistan and supervised by Baghdad.
Ignoring the opposition of the federal government, the KRG exported about 450,000 barrels per day via Turkey, paying Ankara transit fees well above the normal level.
Oil is the main source of revenue for Baghdad and Erbil.
Iraq is the second largest producer of OPEC and exports an average of 3.3 million barrels of crude per day. Oil represents 90% of the country’s income.
