Iraq and Kurdish Regional Government Reach Agreement on Oil Exports, Ending Long-Running Dispute

Strategic Insights -

Iraq announced Thursday an agreement with the Kurdish Regional Government (KRG) to resolve a long-running dispute over crude oil exports from the northern region. The deal could potentially end a suspension that has cost more than $25 billion in lost revenue. The KRG will immediately begin delivering its full oil output to Iraq's state oil marketing company, SOMO, in exchange for an advance payment of $16 per barrel. The agreement stipulates that the KRG must supply at least 230,000 barrels per day (bpd) to SOMO, with any future increases to be determined by a joint measurement and calibration committee.

Key Takeaways:

  • The KRG will deliver its full oil output (280,000 bpd) to SOMO, with 50,000 barrels allocated for local consumption.
  • The Baghdad-based Finance Ministry will provide an advance payment of $16 per barrel to the KRG.
  • The KRG must supply at least 230,000 bpd to SOMO, with future increases to be determined by a joint measurement and calibration committee.
  • The two sides agreed to form a joint team to audit any excess in the region's spending above budgeted allocations.
  • The Finance Ministry will begin disbursing public-sector salaries for May to KRG employees.
  • The deal marks a breakthrough in the long-standing conflict between Baghdad and Erbil over oil revenues and budget entitlements.
  • Iraq is losing 300,000 bpd of its OPEC quota due to the stalled KRG exports.
  • The KRG estimates that the export halt has cost the region an estimated $25 billion in lost income.

Statistics:

  • The KRG produces 280,000 bpd of oil, with 50,000 barrels allocated for local consumption.
  • The KRG must supply at least 230,000 bpd of oil to SOMO.
  • Iraq is losing 300,000 bpd of its OPEC quota due to the stalled KRG exports.
  • The KRG estimates that the export halt has cost the region an estimated $25 billion in lost income.
  • The KRG will receive an initial payment of 120 billion Iraqi dinars ($91.6 million) for May's non-oil revenue share.

Sources:

  • "Iraq, Kurdish region reach oil agreement" by Associated Press, [no date listed], available at [https://apnews.com/article/middle-east-iraq-government-baghdad-1ae91d419b34e7dcae6da32a47ed64b7]
  • Statement from Prime Minister Mohammed Shia al-Sudani's office.