Kurdistan’s Oil Still Offline Due to Discord Over Payments to Producers

Ten months after the Kurdish oil export route was shut over disputes, Kurdistan’s oil continues to be held back from the market due to disagreements over payments to the oil companies, Iraq’s Prime Minister Mohammed Shia al-Sudani told Bloomberg in an interview this week.

Talks are being held, but no solution has been reached yet with the oil companies operating in Iraq’s semi-autonomous region of Kurdistan, al-Sudani told Bloomberg in Davos, noting that the oil firms “have an issue with the cost of producing barrels.”  

Iraq is currently exporting crude oil only via its southern oil export terminals, with around 450,000 barrels per day (bpd) of exports from the northern fields in Kurdistan shut in since March 2023 due to a dispute over who should authorize the Kurdish exports.

The impasse followed an International Chamber of Commerce ruling in March 2023 in a dispute between Turkey and Iraq regarding Kurdistan oil. The ICC ruled in favor of Iraq, which had argued that Turkey should not allow Kurdish oil exports via the Iraq-Turkey pipeline and the Turkish port of Ceyhan without approval from the federal government of Iraq.

Iraq’s government is studying options for amending its budget in order to be able to pay foreign companies operating oil fields in Kurdistan in a bid to restart the flow of oil from the northern semi-autonomous region, al-Sudani told Bloomberg last month. 

“We are discussing the draft amendment of the relevant article along with the parliamentary financial committee,” al-Sudani told Bloomberg, adding that companies operating in Kurdistan “are waiting for the amendment to be done on this article in order to be able to pay for the production cost.”

In November, Norwegian firm DNO, one of the six members of the Association of the Petroleum Industry of Kurdistan (APIKUR), said that the international oil companies operating in Kurdistan would not be producing oil for exports until they have clarity about overdue and future payments and sales terms.

By Tsvetana Paraskova for Oilprice.com

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