KRG Finance Crunch As Export Halt Continues

21 Apr 2023 Issue: 66 / 16 By: Yesar Al-Maleki

The near-month halt of northern Iraqi oil exports via the Turkish Mediterranean port of Ceyhan is squeezing the finances of Iraqi Kurdistan, which is almost completely reliant on such exports for revenue, much more than those of Baghdad. With Somo preparing marketing contracts, Iraq touts near-term resumption but that will depend on Turkey.

Iraq’s northern crude oil exports have been offline for nearly a month (MEES, 31 March), but Prime Minister Mohammed al-Sudani is optimistic that a restart is imminent. Turkey closed the pipeline on 25 March, halting the export of around 500,000 b/d of crude oil, and kept it closed even after Baghdad and Erbil reached a landmark agreement to cooperate over exports.

PM Sudani said on 19 April that the scale of the lost oil revenues “will hurt all.” MEES calculates that at current prices, Federal Iraq is losing $7mn a day, while the KRG is losing a much larger $25mn. The KRG figure is based on the risk-discount applied to its crude export price due to its dispute with Baghdad. With the pair agreeing on a joint marketing structure, that discount disappears, and the KRG’s daily implied costs jump to $30mn. (CONTINUED - 1065 WORDS)