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Iraq will restart the export of crude oil from the Kurdistan region by the end of the week, the country’s Prime Minister, Mohamed Shia al-Sudani, said, as quoted by Rudaw.
The news follows comments made earlier this week by the deputy speaker of the Iraqi parliament, who said Erbil and Baghdad had settled most of their differences with regard to oil exports from Kurdistan, and all that was left was hammering out some details.
“Today or tomorrow, we will go to sign the agreements with SOMO and the oil companies to resume exports,” PM Al-Sudani told Rudaw, adding that the resumption of exports could begin before the end of the week.
Kurdistan’s crude oil exports – around 400,000 to 450,000 bpd shipped through an Iraqi-Turkey pipeline to Ceyhan and then on tankers to the international markets – were halted in late March by the federal government of Iraq.
A few days earlier, the International Chamber of Commerce ruled in favor of Iraq against Turkey in a dispute over crude flows from Kurdistan. Iraq argued that Turkey shouldn’t allow Kurdish oil exports via the Iraq-Turkey pipeline and Ceyhan without approval from the federal government of Iraq.
The court ruled that Turkey should pay Iraq compensation of $1.5 billion for what now appears to be illegal exports of oil over five years.
In response, Turkey shut off the Kirkuk-Ceyhan pipeline, effectively suspending oil exports from Kurdistan. Emergency talks followed, as did oil field shutdowns because Kurdistan does not have enough storage space to maintain production. Oil prices jumped considerably on the production outage in northern Iraq.
The negotiations between Baghdad and Erbil are focused on who gets more control over the oil flows, with the two sides being forced to make concessions so exports could resume. For the central government in Iraq, it looks like a win, because exports will now go through the Iraqi state-owned oil company, SOMO, rather than through the Kurdistan authorities.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com