Progress on Oil Export Mechanism Between Iraq and Kurdistan Region
The Iraqi Oil Minister has announced that a delegation from the Ministry of Oil will visit the Kurdistan Region to establish an agreement on the mechanism for receiving oil, which will subsequently be exported via the Turkish port.
On February 18, 2025, Hayan Abdulghani stated that a technical delegation, led by the Deputy Minister for Directors for Direction, Legal, and the Oil Marketing Company (SOMO), will be negotiating in Erbil.
In coordination with Kamal Mohammed, the Minister of Natural Resources from the Kurdistan Region, discussions will focus on the mechanisms surrounding oil reception and exportation through Turkey.
The amendment to the budget law is set to be enforced at the end of next week, following its publication in the official Iraqi announcements. However, the stipulated 60-day period for finalizing the oil extraction price will begin on the day the oil is delivered to Iraq.
The Federal Oil Ministry’s delegation visiting the Kurdistan Region will engage with their counterparts in the Ministry of Natural Resources to formulate practical measures for exporting oil through the Turkish World Port.
The current plan is to initiate exports starting from 100,000 barrels per day, with a potential increase up to 300,000 barrels daily, deviating from the initially projected 400,000 barrels as outlined in the budget amendment.
The Iraqi Oil Ministry cautions that due to OPEC Plus export commitments, it cannot accept additional oil volumes from the Kurdistan Region at this time.
In accordance with the OPEC Plus agreement aimed at stabilizing oil prices, Iraq’s authorized production capacity stands at four million barrels per day, with approximately 3.5 million barrels earmarked for export and the remainder utilized domestically.
On February 17, 2025, Minister Abdul Ghani confirmed that the export process would resume within a week, allowing Baghdad to receive a minimum of 300,000 barrels of oil each day from the Kurdistan Region, in alignment with the Iraqi budget law amendment. This will facilitate the allocation of oil barrels to Baghdad.
Reports indicate that the Kurdistan Region requires 100,000 barrels of oil daily for domestic needs.
Jamal Kochar, a member of the Iraqi Parliament’s finance committee, emphasized that the Kurdistan Regional Government (KRG) must formally communicate its readiness to deliver 400,000 barrels to Baghdad; otherwise, any ensuing issues will fall under the jurisdiction of the Oil Ministry, not the Kurdistan Region.
On February 2, 2025, the Iraqi Parliament approved the first amendment to the three-year budget law, which nullified Article 12 and introduced a new legislative draft.
The amendment, which governs the production, transportation, and delivery of oil within the Kurdistan Region, has set a production and transportation cost of $16 per barrel until a comprehensive valuation is established by an international consulting entity within a 60-day timeframe.
This law will take effect following its publication in the official government channels, marking the beginning of the 60-day period during which the Kurdistan Regional Government (KRG) will consult with the advisory organization.
