Iraq's Oil Ministry Seeks Urgent Meeting with Kurdish Authorities to Restart Oil Exports

Iraq's oil ministry has called for an urgent meeting with the Kurdistan Regional Government (KRG) and international oil companies (IOCs) to discuss resuming oil exports via the Iraq-Turkey oil pipeline (ITP) to the Turkish port of Ceyhan. The pipeline has been inactive since March 2023 because of legal and financial disputes.

The ITP, which once handled about 0.5% of global oil supply, was shut down following a ruling by the International Chamber of Commerce. The arbitration court determined that Ankara had breached a 1973 treaty by facilitating oil exports from the Kurdistan region without the consent of the Iraqi federal government.

The halt in oil exports has significantly impacted the economies of both Baghdad and Erbil. The Kurdistan region previously exported around 450,000 barrels of oil daily through the Ceyhan pipeline, including 75,000 barrels from federally controlled fields in Kirkuk.

The resumption of oil exports is vital for the economies of both Iraq and the Kurdistan region, as it will help to mitigate the significant economic losses incurred over the past 14 months. A successful resolution to the dispute could also have broader implications for global oil markets and prices.

The Iraqi oil ministry emphasized the urgency of the situation, stating, "We urge the Kurdistan Region's Ministry of Natural Resources and international oil companies operating in the region to convene in Baghdad for a critical meeting." The meeting aims to facilitate an agreement on the swift resumption of oil production and export.

Despite readiness from both Ankara and the Kurdistan region, oil exports have yet to resume. The main obstacle appears to be the high production fees demanded by IOCs. The Iraqi government is willing to pay around $6 per barrel for extracted oil, while the companies demand around $20 per barrel.

The Association of the Petroleum Industry of Kurdistan (APIKUR) has called for tripartite talks between the Iraqi government, the KRG, and IOCs to resolve the impasse. APIKUR spokesperson Myles B. Caggins III stated, "APIKUR's member companies believe tripartite talks between Government of Iraq, Kurdistan Regional Government, and international oil companies are the best way to find solutions that will lead to the resumption of ITP exports."

The economic losses resulting from the halt in oil exports have been substantial. APIKUR estimates that the cumulative losses have exceeded $16.5 billion over the past ten months.

The meeting requested by Iraq's oil ministry is vital for resolving the 14-month hiatus in oil exports and mitigating the economic impact on both the federal government and the Kurdistan region.

Key Takeaways

• Iraq's oil ministry calls for urgent meeting with KRG and IOCs to resume oil exports via Iraq-Turkey pipeline.
• Pipeline has been inactive since March 2023 due to legal and financial disputes.
• Halt in oil exports has significantly impacted economies of Baghdad and Erbil, with losses exceeding $16.5 billion.
• Main obstacle to resuming exports is high production fees demanded by IOCs, with Iraqi government willing to pay $6/barrel and IOCs demanding $20/barrel.
• Tripartite talks between Iraqi government, KRG, and IOCs may be necessary to resolve impasse and resume oil exports.