ERBIL, Kurdistan Region of Iraq – The Kurdistan Regional Government’s (KRG) Council of Ministers on Wednesday said that oil destined for export through the Ceyhan port will be handed over to Iraq’s State Organization for Marketing of Oil (SOMO), while Erbil will directly pay companies for oil production that is for domestic use in the Region.

“The amount of oil that is currently ready for export and is produced by foreign companies will be handed over to the State Organization for Marketing of Oil (SOMO) for the purpose of export through the port of Ceyhan,” the Council of Ministers said in a statement after a regular session on Wednesday.

Erbil will " take responsibility for compensating" oil companies for the amount of oil that is to be used for domestic consumption in the Kurdistan Region, the statement added.

Differences between the two governments reached a new peak after Iraqi Finance Minister Taif Sami said in May that the federal government will not be funding salaries of the Kurdistan Region’s civil servants, arguing that the Region had already exhausted its annual budget share in May.

Erbil and Baghdad came to an agreement earlier in July that sought to resolve the outstanding issues between the two governments. The agreement outlined that the KRG must hand over a specified amount of oil and the Iraqi federal treasury’s share to the federal government in exchange for the Iraqi government’s disbursement of the Kurdistan Region’s civil servant salaries.

"The salary list and trial balance for the month of June have been sent to the Federal Ministry of Finance," said KRG's Minister of Finance and Economy Awat Janab Noori during the council session, adding that it's now the Iraqi finance ministry's responsibility to disburse the Kurdistan Region's civil servant salaries for June, days after the salaries for May were disbursed, months past their due date.

The KRG’s Council of Ministers in their previous session last Wednesday commended the “responsible and resilient stance” of the people of the Kurdistan Region in the face of the difficulties that had befallen them, reiterating that the KRG had “fully implemented all its obligations” in regard to the agreement.

In a phone call with Iraqi Prime Minister Mohammed Shia' al-Sudani earlier last week, US Secretary of State Marco Rubio "noted the importance of paying Iraqi Kurdistan Region (IKR) salaries consistently and resuming oil exports via the Iraq-Türkiye Pipeline,” read a statement attributable to State Department spokesperson Tammy Bruce sent to The New Region.