BAGHDAD: Iraq’s federal government and the Kurdish regional administration have finalised an agreement with oil companies to restart crude exports through a pipeline to Turkey.
Two oil officials confirmed the breakthrough, which will end a suspension of exports from Iraqi Kurdistan that has lasted since March 2023.
“We will on Tuesday start technical procedures to prepare pipeline operations, with oil flows expected to restart within 48 hours,“ an oil official with knowledge of the agreement told Reuters.
The deal is contingent upon approval from the Iraqi cabinet during its meeting on Tuesday.
Under the preliminary plan, the Kurdistan Regional Government will guarantee the delivery of at least 230,000 barrels per day to the Iraqi state oil marketer SOMO.
An additional 50,000 barrels per day will be reserved for local consumption within the Kurdistan region.
An independent trader will manage all sales from the Turkish port of Ceyhan using the official pricing set by SOMO.
For every barrel sold, a payment of $16 will be deposited into an escrow account for proportional distribution to the oil producers.
The remaining revenue from each sale will be directed to SOMO, according to the officials.
The draft agreement does not outline a resolution for the approximately $1 billion in unpaid arrears owed to producers from the period between September 2022 and March 2023.
This agreement follows negotiations between an Iraqi oil ministry delegation, the semi-autonomous Kurdish regional government, and international oil firms.
The deal emerges as OPEC+ oil producing nations are increasing their output to secure a larger market share.
The pipeline was closed in March 2023 after an International Chamber of Commerce ruling ordered Turkey to pay Iraq $1.5 billion in damages for unauthorised exports by the KRG.
Turkey is currently appealing that ruling but has publicly stated its readiness to resume operations through the pipeline.
Disagreements between Baghdad, the KRG, and foreign oil companies over contract terms and outstanding payments have previously prevented a restart.
The negotiations have also been influenced by diplomatic pressure from Washington, which has encouraged all parties to find a resolution.
Reuters reported last week that Iraq, OPEC’s second-largest producer, had given its preliminary approval to a plan for restarting the exports. – Reuters