Kurdistan Region oil industry group urges talks to resume exports​

ERBIL — The Association of the Petroleum Industry of Kurdistan has urged the Government of Iraq, the Kurdistan Regional Government, and international oil companies to resume “continued tripartite discussions” over the stalled oil exports via the Iraq-Turkey Pipeline.

APIKUR, representing eight international oil firms active in Kurdistan’s oil fields, issued a statement on Sept. 22 expressing optimism following Iraqi Prime Minister Mohammed Shia’ Al-Sudani’s recent remarks suggesting the pipeline could reopen by the end of 2024.

In a Bloomberg interview, Al-Sudani outlined the challenges: “The Iraqi budget law sets the production cost at $8 per barrel, while the actual production cost, based on contracts with companies in the Kurdistan region, is $26 per barrel. Iraq now faces two options: either renegotiate the contracts with the oil companies operating in the region or amend the budget law.” He added, “The oil companies have refused to renegotiate the production cost terms in their contracts.”

Discussions are ongoing to find a solution, Al-Sudani said, adding that reopening the pipeline this year is “possible.”

APIKUR welcomed the dialogue, emphasizing that oil exports could resume if agreements ensure “payment surety for past and future exports, direct payments, and preservation of commercial and economic terms.” The association indicated a willingness to modify contracts if agreed between all parties.

Both APIKUR and the KRG have advocated for direct sales agreements with Iraq’s State Oil Marketing Organization as a potential solution, ensuring payment through upfront or escrow payments at Ceyhan Port.

As world leaders convene at the United Nations General Assembly, APIKUR called on Iraq’s government to engage with the KRG and international oil companies to swiftly resolve outstanding issues and restore exports.

Exports via the Iraq-Turkey Pipeline have been suspended since March 2023, following an international arbitration ruling that Turkey had violated a 1973 agreement by allowing KRG oil exports without Baghdad’s approval.

Subsequently, the federal budget negotiated in Baghdad set fixed costs for oil companies that fell far below what the firms operating in the Kurdistan Region had negotiated with the KRG.

The Kurdistan Region’s Prime Minister Masrour Barzani recently highlighted the economic toll of the suspension, revealing in a Sept. 21 interview that losses have exceeded $19 billion. Both the KRG and APIKUR have blamed the federal government for failing to compensate the region for these losses.

Iraq’s Oil Ministry, however, rejected these claims, calling them “blatant interference” in the country’s internal affairs.

Before the pipeline closure, approximately 450,000 barrels per day were exported through the pipeline.

APIKUR stated that restoring the pipeline would generate roughly $1 billion in monthly revenue for Iraq. Since the halt, $20 billion in potential revenue has been lost.

This is APIKUR’s second call for negotiations this year, following a May appeal that led to a meeting without any agreement.