Erbil and Baghdad Finalize Oil Export Protocol Amid Ongoing Challenges

The Kurdistan Regional Government (KRG) and the Iraqi federal government have reached a tentative agreement on resuming oil exports from the Kurdistan Region, as announced on Wednesday. A new export protocol has been signed by 23 delegates, including 17 representatives from Iraq’s oil ministry. This agreement allows the KRG to retain 50,000 barrels per day for domestic consumption, while the remaining oil will be handed over to the State Oil Marketing Organization (SOMO).

Despite the optimism surrounding this development, significant obstacles remain. The most pressing issue is the need for Baghdad to negotiate with Turkey to reopen the Iraq-Turkey pipeline, which has been non-operational since March 2023 due to a ruling from a Paris arbitration court. Until Turkey agrees to resume oil flows, the new deal risks becoming another addition to the long list of stalled agreements between Erbil and Baghdad.

Baghdad asserts its commitment to purchasing 230,000 bpd from the KRG under a prior agreement made in July. In exchange, the federal government has promised to address delayed public sector salaries in the Kurdistan Region. So far, it has allocated 975 billion dinars (approximately $737 million) to cover salaries for May, but payments for June and July remain unresolved due to ongoing “technical and financial disputes.”

Negotiations between Erbil and Baghdad have been ongoing since July, with previous discussions often ending without clear resolutions. The prospect of a functioning oil export system is critical for both governments, as it would provide much-needed revenue and stabilize the region amid economic challenges.

The KRG’s natural resources ministry remains hopeful that this latest protocol will lead to a sustainable solution. Yet, without Turkey’s cooperation, the future of oil exports hangs in the balance. As the situation develops, both sides must navigate the complexities of these negotiations to ensure a more fruitful and reliable partnership moving forward.