Obstacles in Oil Export from the Kurdistan Region to Turkey
Recent reports indicate that the financial mechanisms governing payments to production and transport companies pose significant challenges in resuming oil exports from the Kurdistan Region to the Turkish port of Ceyhan via the federal "SOMO" company.
Sources inform that a delegation from the Kurdistan Region, which visited Baghdad at the beginning of the week, failed to find resolutions that would expedite the export process. This impasse is largely attributed to the insistence of relevant companies on receiving production and transportation fees upfront, prior to the commencement of exports. The federal government in Baghdad has firmly rejected any monetary transfers to the Kurdistan Region until all financial obligations are resolved, including debts owed to Baghdad from the Turkish side. Consequently, there will be no financial disbursements before the export activities are reinstated.
The current structure dictates that production and transportation fees, set at $16 per barrel, are subject to adjustment two months after re-export, contingent upon approval from a specialized intermediary firm responsible for calculating these costs. As such, no fees will be disbursed until the resumption of exports takes place.
There are indications that another meeting may occur on Thursday or the following week in Baghdad, featuring a delegation from the Kurdistan Region along with representatives from oil companies.
Earlier this month, a delegation from the Kurdistan Regional Government engaged in discussions with the Federal Ministry of Oil aimed at addressing the conditions necessary for reinstating oil exports from the region’s fields, alongside other operational concerns.
Initially scheduled for Tuesday, this meeting was postponed due to unfolding developments surrounding the export situation.
These deliberations emerge following announcements from eight international oil companies, stating that oil exports have not resumed as previously assured by the Iraqi Oil Minister. In light of this, the Federal Ministry of Oil has convened an expanded meeting with oil companies operating in the region to address the technical and logistical requirements essential for resuming exports.
