Baghdad Proposal To Resolve Kurdistan Oil Impasse: More Questions Than Answers

8 Nov 2024 Issue: 67 / 45 By: Yesar Al-Maleki

Iraq’s Federal government has passed a budget amendment offering Kurdistan-based IOCs substantially higher per-barrel payments for output. While parliament’s final stamp is needed, the lack of details is causing confusion.

In what appears to be a unilateral move by Baghdad with the aim of resolving the ongoing impasse preventing the resumption of oil exports via the Iraq-Turkey Pipeline (MEES, 31 March 2023), Iraq’s federal cabinet on 5 November agreed a proposal to amend the country’s budget law. Baghdad is upping its remuneration offer to upstream operators in Kurdistan to $16/B while calling for the appointment of a consultant to assess “fair” production and transport costs for each oilfield.

Article 12 of the 2023-25 Federal budget (MEES, 24 March 2023) mandates that the Kurdistan Regional Government (KRG) hand over 400,000 b/d of production for export by Federal oil marketer Somo at Turkey’s Ceyhan port, or to the Ministry of Oil to be locally marketed. In return, the region would secure its $13bn share of the budget. (CONTINUED - 897 WORDS)