ERBIL, Kurdistan Region of Iraq—The US called on Iraq to work with the Kurdistan Regional Government (KRG) to resolve “contract disputes” and “pay arrears” owed to American oil companies working in the Kurdistan Region’s oil fields. Erbil and Baghdad engaged in extensive talks to resume Kurdish oil exports two years after they were halted.
The request came during a Sunday phone call between Iraqi Prime Minister Mohammed Shia’ al-Sudani and US National Security Advisor Mike Waltz.
“The National Security Advisor urged the Iraqi government to work with the Kurdistan Regional Government to address remaining contract disputes and pay arrears owed to U.S. energy companies,” Waltz wrote in a post on X, adding he “encouraged” Sudani to welcome “more western and U.S. energy companies into Iraq’s oil and gas sectors.”
International oil producers in the Kurdistan Region on Thursday said they are ready to “immediately” resume oil exports through the Iraq-Turkey pipeline, as soon as the governments in Erbil and Baghdad meet their previously-communicated demands.
Representatives from the Association of the Petroleum Industry of Kurdistan (APIKUR) on Thursday attended a meeting in Baghdad with officials from the Iraqi federal government and the Kurdistan Regional Government (KRG), aimed at restarting Kurdish oil exports following a two-year halt.
The oil producers said that they conveyed their conditions to the officials during the meeting, stressing that “additional meetings are required to finalize agreements.”
“Fair and transparent agreements are necessary that include payment surety, transparent implementation of Iraq’s budget law stipulations, and resolution of payments that are in arrears,” read a statement from APIKUR - an association of eight companies that together make up around 60 percent of the total amount of Kurdish oil production.
The companies said they need formal agreements which ensures that the producers will be “fully paid” for the oil, and also demanded agreements that ensure they are paid for “oil delivered but not paid for between October 2022 and March 2023.”
The Iraqi Parliament passed an amendment to the Federal Budget Law in early February, which obliges Baghdad to reimburse Erbil for the production and transportation cost of one barrel of oil at the average cost of production and transportation of the federal oil ministry.
The cost was previously valued at $6, which the IOCs repeatedly criticized as being way lower than their actual expenses. According to the amendments, the IOCs would now be paid $16 to in the first phase, before an independent technical consultant team is assigned to assess the extraction cost.
APIKUR said that the terms of their existing contracts and the economic models within them must be respected, adding that the work scope of the consultant “should be agreed by all parties,” noting that they have already recommended consultants to KRG officials.
Exports of the Kurdistan Region’s oil through the Turkish Ceyhan pipeline, where part of Kirkuk’s oil was also exported, were halted in March 2023 after Ankara lost a case against Baghdad in a Paris-based arbitration court. The case accused Ankara of breaching a 1973 agreement by allowing the KRG to start selling oil independent of Baghdad.
After the nearly two-year halt, Baghdad and Erbil eventually announced late February that they reached an agreement to resume the Region’s oil exports to the international market through Turkey’s Ceyhan port.
The halt in exports has dealt a major blow to Iraq and the Kurdistan Region's economy, with over $27 billion in lost revenue to date.
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