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Iraq Is Yet to Amend Budget to Get Kurdish Oil Flowing Again

2024-03-23 10:52:00

Oil Minister Hayyan Abdul Ghani said that the Iraqi government is still studying a proposed amendment to the federal budget that would enable Baghdad to pay international oil companies working in the Kurdistan region.

The change would allow producers in the semi-autonomous region to resume output — and eventually exports via the Turkish port of Ceyhan. Turkey shut the pipeline bringing crude from Kurdistan last March, and that’s resulted in billions of dollars of lost revenue for the governments and companies involved.

A key hurdle to restarting flows is the production cost of Kurdish oil. Prime Minister Mohammed Shia Al-Sudani in December put that cost at $21 a barrel, compared with just $8 in other regions of Iraq.

“We seek to accelerate the settlement of the cost issue and resume exports as soon as possible,” Bloomberg quoted the Minister. The Oil Ministry hopes to review and amend contracts signed between the Kurdistan Regional Government and the international companies, he said.

Turkiye closed the pipeline after an arbitration court ordered it to pay Iraq $1.5 billion in compensation for transporting oil through the link without Baghdad’s approval. Ankara, which claimed the pipe was shut for repairs, said in October it was ready for operations and it was up to Iraq to resume flows.

Turkish President Recep Tayyip Erdogan is due to visit Baghdad next month, which may help resolve other sticking points, including the fine. Abdul Ghani told Bloomberg that Iraq is keen to restart exports through Ceyhan and to maintain strong economic ties with Turkiye.

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