Kurdistan Oil Export Dilemma: Key Insights from Industry Expert
On March 6, 2025, an oil affairs expert provided critical observations regarding the ongoing challenges surrounding the export of oil from the Kurdistan Region. Expert Sherwani highlighted that the primary impediment remains the outstanding reservations and requests from oil companies, as well as the Apikur Association. Specifically, they have called for a transparent framework regarding the payment of oil dues prior to the commencement of exports. This mechanism is expected to be formally documented through a tripartite contract involving the Federal Oil Ministry, the regional natural resources authority, and the operating oil corporations.
Key Demands for Oil Export Resumption
Sherwani further noted a significant demand for guarantees related to outstanding dues, which are estimated to be approximately $1 billion. The oil companies have also insisted that the same entities engaged in operations across the central and southern regions of Iraq be involved in this process.
He emphasized the necessity for ongoing discussions, suggesting that all parties must exhibit flexibility to facilitate the resumption of oil exports, as a halt is detrimental to all stakeholders involved.
Recent Developments in Oil Export Activity
In February, the Federal Ministry of Oil declared that it had completed the necessary preparatory steps to restart oil exports from the Kurdistan Region through the Turkish port of Jihan. This initiative aligns with stipulations set forth in the amended budget law and adheres to Iraq’s production quotas established by OPEC.
The Kurdistan Regional Government’s negotiating delegation responded positively, stating their willingness to adhere to the Federal Public Budget Law, particularly regarding the re-exportation of oil produced from regional fields through the Somo company. However, they highlighted that full compliance with the law necessitates consensus on several critical issues, including:
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Allocation for Local Consumption: Establishing clear quantities designated for local use within the region, reflecting actual needs comparable to other areas of Iraq.
- Mechanism for Dues Payment: Developing a specific and transparent process for the disbursement of dues to production and transportation companies, in accordance with the budget law’s provisions.
These discussions are paramount in determining the future of oil exports from the Kurdistan Region, impacting not only local economies but also Iraq’s broader economic framework.
