Challenges Surrounding the Resumption of Kurdistan Oil Exports through Turkish Port of Jihan
The reconnection of oil exports from the Kurdistan Region through Turkey’s Jihan port faces significant hurdles due to legal and financial disputes. Tensions escalated recently, particularly following conflicting statements between the Federal Ministry of Oil and the Group of Eight Oil Companies (Apuroor) operating in Kurdistan regarding the timing for resuming exports.
The Federal Ministry of Oil has officially summoned the international oil companies engaged with the Kurdistan Regional Government to attend a critical meeting in Baghdad on Tuesday, March 4, 2025. This gathering aims to address contract-related issues in an effort to develop oil fields according to international best practices and align with national interests.
In a recent announcement, the eight oil companies operating in the Kurdistan region declared their intention not to resume exports via Jihan, despite Baghdad’s assertions of an impending restart. Apuroor, representing 60% of the region’s oil production, emphasized that there has been no official communication to clarify commercial agreements or ensure payment guarantees for both past and future exports.
Apple Corporation’s spokesperson, Miles Kagins, reiterated that their member companies would not initiate exports as anticipated. Notable members of this group include Gulf Keston Petroleum, D.NO, Jinil Energy, and Shamran Petroleum.
Meanwhile, Eng. Hayyan Abdel-Ghani, Deputy Prime Minister for Energy Affairs and Minister of Oil, has expressed optimism about the imminent resumption of oil exports from the Kurdistan Region, forecasting an initial output of 185,000 barrels per day, gradually increasing to levels outlined in the federal budget via the Iraqi Oil Marketing Company (SOMO).
Recent reports indicate a renewed effort by the Iraqi government to challenge the legality of production-sharing contracts for Kurdish oil by presenting new documentation to a court in Baghdad. This raises concerns regarding the origin of the crude oil slated for export.
The federal government has historically adamantly opposed these legal agreements and has been involved in prolonged disputes concerning oil revenues from the Kurdistan Region. However, recent negotiations between Erbil and Baghdad have yielded positive developments regarding contentious issues, including the payment of regional salaries and the restarting of oil exports through Jihan. These discussions have signaled a potential resolution to a crisis that has strained the finances of both the Kurdistan Regional Government and the federal administration.
Contradictory statements emerged from Prime Minister Mohammed Shia Sudani, who indicated that Baghdad is ready to resume oil exports from Jihan, highlighting the complexity of the ongoing situation.
On March 25, 2023, Iraq won an arbitration case against Turkey regarding unauthorized oil exports from the Kurdistan Region, which halted the region’s oil flow, previously averaging 480,000 barrels per day. Following this, amendments to the public budget were made on February 2, facilitating the resumption of exports that had been suspended for two years.
These amendments are intended to support international oil companies’ production costs in the Kurdistan Region. In this context, the extraction and transportation cost per barrel of oil has been set at $16.
According to Minister Fouad Hussein, discussions regarding the legal framework and technical matters have taken place, signaling progress toward formalizing oil exports from the region. Iraq’s current production levels from northern fields, including Kurdistan, range between 400,000 to 500,000 barrels per day.
Furthermore, Minister Abdel-Ghani stated earlier that Iraq aims to transport at least 300,000 barrels per day once operations restart, with efforts underway for the Kurdistan Regional Government to transition control of its oil to SOMO, the federal organization responsible for marketing.
Production in the Kurdistan Region is estimated to be 280,000 to 300,000 barrels per day, meeting local consumption needs of approximately 110,000 to 120,000 barrels per day for energy generation. However, Baghdad believes that local demand may be met with a lesser amount.
The resumption of pipeline exports presents a dilemma for Baghdad, which must navigate OPEC Plus production cuts while managing compliance with pricing demands amid global scrutiny following previous U.S. calls for lower oil prices.
According to oil and energy expert Kovand Sherwani, all Iraqi oil output is counted towards the nation’s production quota, a figure that has adjusted from 3.5 million barrels per day to approximately 3.3 million barrels per day due to various factors affecting production.
The Iraqi government is actively pursuing a resolution that would allow for adjustments in its federal budget to facilitate payments to international oil companies operating within the Kurdistan Region. This follows a previous agreement with the Kurdistan Regional Government in April 2023 to authorize the export of 400,000 barrels of oil per day through SOMO, including arrangements for regional oversight of sales revenue.
