Baghdad, KRG agree to resume northern Iraqi oil exports

Northern Iraq's Kurdistan Regional Government (KRG) has reached an "initial agreement" with Iraq's federal government in Baghdad to resume crude exports from the north of the country this week, head of the KRG's foreign media affairs Lawk Ghafuri told Argus.

Around 400,000 b/d of northern Iraqi Kurdish crude has been kept from reaching international markets since 25 March after Turkey closed the export pipeline that transports the oil to the Mediterranean port of Ceyhan — the only viable outlet through which the KRG can export its crude. The pipeline shutdown followed a ruling by the Paris-based International Chamber of Commerce's court of arbitration which said Turkey had breached a 1973 bilateral agreement with Iraq by allowing crude marketed by the KRG to be exported without Baghdad's consent.

The KRG has since held several meetings with officials in Baghdad to try to resolve the dispute, culminating in a deal at the weekend. "This agreement will remain in effect until the oil and gas law bill is approved by the Iraqi parliament," Ghafuri said.

Iraq's federal oil ministry has yet to confirm the deal. But in a statement released on 2 April, it said it "hopes, in light of the positive atmosphere and bilateral understandings, to reach an agreement to resume oil exports soon".

A source with knowledge of the matter told Argus the deal stipulates that crude from the semi-autonomous Kurdistan region will now be jointly exported by the KRG's natural resources ministry and Iraq's federal oil marketing firm Somo. An account will be set up for Kurdish oil revenues under the KRG's management but Iraq's federal government will have access to monitor it, the source added. Meanwhile, Turkey is waiting for an official announcement of the deal before it facilitates the resumption of pipeline flows of Kurdish crude to Ceyhan.

The pending restart of crude exports from Iraq's Kurdistan region comes on the heels of yesterday's surprise news that eight members of the Opec+ coalition, including Iraq, have agreed to a collective production cut of almost 1.2mn b/d from May until the end of the year.

By Bachar Halabi