Challenges in Resuming Crude Oil Exports from Kurdistan Region
The Parliamentary Oil and Gas Committee has identified ongoing challenges between the federal government in Baghdad and the Kurdistan Region regarding the resumption of crude oil exports through the Turkish port of Jihan. This comes as new negotiations between the two parties are set to commence.
Oil Export Preparations
Ali Shaddad, the committee’s spokesman, stated that the Ministry of Oil has finalized all necessary preparations to resume crude oil exports via the Jihan port. The Turkish government has been informed of these developments, following amendments to the budget law. The newly amended law stipulates that exported oil quantities will range between 300,000 to 325,000 barrels per day.
However, Shaddad pointed out that the last meeting between the Ministry of Oil and the Kurdistan Region revealed significant discrepancies. The Kurdistan Region’s request to increase local consumption from 46,000 to 110,000 barrels per day violates the budget approved by the region’s legislators. This demand is seen as a barrier to resuming oil exports through Jihan, as the negotiations reached an impasse due to a legal stipulation that precludes further negotiation.
Obligations and Perspectives
According to Shaddad, the government of the Kurdistan Region maintains that the current export amount defined in the agreement is unfeasible, which jeopardizes adherence to the law and recent amendments. He has urged the Iraqi central government, under the leadership of Prime Minister Mohammed Shia Sudani, to apply the budget law comprehensively along with its amendments.
Shaddad expressed concern that Iraq is bound by OPEC regulations to export a total of 400,000 barrels per day from northern Iraq, yet the Kurdistan Region only supplies 300,000 barrels, leading to a loss of 100,000 barrels of entitlement over the previous years.
Upcoming Negotiations
A delegation from the Kurdistan Region is scheduled to engage in discussions with Iraqi oil officials either today or early next week in Baghdad to address these issues.
Economic Implications of OPEC Membership
In related remarks, Shaddad rejected the notion circulating within political circles that Iraq should withdraw from OPEC. He emphasized that leaving the organization would result in significant economic losses, with Iraq losing leverage over oil pricing on the global stage. Instead, he advocated for strengthening Iraq’s international relations and forming strategic agreements with OPEC members, particularly Saudi Arabia, to enhance its crude oil production and export capacity, thereby revitalizing the oil sector.
Logistical Obstacles
Despite hopes for resuming exports, sources indicate that exporting oil from the Kurdistan Region through the Turkish port of Jihan is hindered by disputes over production and transportation costs. Oil companies demand upfront payments, a condition that the federal government in Baghdad is currently unwilling to meet until previous financial obligations are resolved.
Recent Developments
Today, Hayyan Abdul Ghani, Iraq’s Deputy Prime Minister for Energy Affairs, chaired a meeting of the Iraqi-Turkish Committee, attended by representatives from relevant Iraqi ministries. He underscored the potential for increasing Basra oil exports through the Kirkuk-Jihan pipeline.
These deliberations take place in light of reports from eight international oil companies indicating that oil exports have yet to commence, despite prior assurances from the Iraqi Oil Minister.
The Federal Ministry of Oil has also called for a meeting with the oil companies operating in the Kurdistan Region to discuss the technical and logistical aspects necessary for the resumption of exports.
This overview provides insight into the ongoing negotiations and challenges faced by Iraq’s oil sector, especially in relation to the Kurdistan Region, highlighting the complexities of international agreements and the overarching significance of OPEC membership in influencing Iraq’s economic strategies.
