KRG’s Oil Sector Hangs By A Thread As Iraq-Turkey Arbitration Nears Closure

3 Feb 2023 Issue: 66 / 5 By: Yesar Al-Maleki

Iraq expects imminent victory in its nine-year arbitration with Turkey over Iraqi Kurdistan’s independent oil exports. Coupled with the departure of a key trading firm and the absence of budget payments, the KRG has suffered a trifecta of damaging blows, greatly weakening its hand in negotiations.

It’s crunch time for the Kurdistan Region of Iraq’s independent oil sector, which has been operating in a legal grey area since its inception. The region depends on crude oil exports through Turkey, but a court ruling in Paris on the legality of the route is imminent and is not expected to favor Kurdistan. Baghdad has already ratcheted up the pressure on players in the region’s oil sector and the arbitration looks set to give it further leverage.

With Iraq also threatening legal action against buyers of Kurdish oil, the region’s oil sector is under the most pressure it has faced in years. Key offtaker Trafigura’s decision to walk away only adds to the perception that the sector is facing an existential crisis. (CONTINUED - 1969 WORDS)