Kurdistan Oil Export Negotiations Remain Stalled
Following a series of negotiations, the Iraqi Federal Ministry of Oil and relevant oil companies have yet to establish a consensus regarding the financial entitlements tied to the oil exports from the Kurdistan Region. This impasse comes after a two-year hiatus in oil export activities.
Currently, one-third of the designated negotiation period has elapsed, as Erbil and Baghdad seek to identify a third-party entity that will provide reliable estimates concerning the pricing of oil production and exports.
For the year 2024, Iraq is projected to export over 28 million barrels of oil. However, oil shipments from the Kurdistan Region are reported to be 20% lower than those from Basra destined for the European markets.
In their most recent meeting, which took place on March 6, 2025, the Ministry of Natural Resources, the Ministry of Oil, and oil companies identified longstanding financial entitlement agreements as significant barriers to progress.
The anticipated resumption of oil exports from the Kurdistan Region is contingent upon amendments made to the general budget law, effective since February. These amendments mandate the Kurdistan Region to deliver 400,000 barrels of oil per day to the Ministry of Oil or the Oil Marketing Company (SOMO), enabling the resumption of oil exports through the Turkish port of Ceyhan, a process that has been halted since March 25.
Industry experts note that the revival of Kurdistan’s oil exports to European markets, which have faced interruptions, poses risks to regional stability, notably affecting the Red Sea. Concurrently, Iraq is exploring options to expand its oil export ports.
Repeated assurances from the Ministry of Oil indicate that the resumption of oil exports from the Kurdistan Region is imminent. On February 28, 2025, Iraqi Oil Minister Hayyan Abdul Ghani stated that an announcement regarding the export resumption could occur within hours; however, ten days have since passed without a definitive restart.
Under a preliminary agreement between Erbil and Baghdad, daily oil exports are projected to range between 185,000 to 300,000 barrels.
According to expert analysis, oil transported from Basra typically requires 20 days to reach European markets. Furthermore, it is observed that shipping costs of oil exported from Kurdistan are 20% lower compared to those from Basra when factoring in global pipeline transportation.
The recent budget amendment allocates $16 for the production and transportation of each barrel of oil sourced from the Kurdistan Region. However, negotiations on the responsible third party remain unresolved, with a 60-day window for finalization from the date of the amendment.
Currently, Iraq’s oil production stands at approximately 4.6 million barrels per day. Nonetheless, due to commitments under the OPEC Plus agreement, the actual exportable amount is limited to 3.3 million barrels daily, despite a stipulation within the General Budget Act calling for 3.5 million barrels to be exported daily.
In 2024, Iraq’s oil exports exceeded agreed-upon levels, prompting OPEC Plus to require compensatory measures. This compensation process commenced in August 2024 and will extend until September, necessitating compensation of approximately 28.785 million barrels.
