The Iraqi parliament ended this year’s session without finalizing a deal with the semi-autonomous region of Kurdistan for the exports of crude oil from the northern region.

According to local media, the deal was to be debated last Thursday, along with several other topics, but since then no update regarding any decision on the deal has been issued, suggesting the Iraqi parliament has delayed the final decision on the deal for January when the new parliamentary session will begin.

One report by Shafaq said that the topic of Kurdish oil exports had led to a deadlock among members of parliament who could not reach an agreement about the compensation that Baghdad would owe the Kurdish government for the costs of producing and transporting the oil. The difference of opinion prompted the Kurdish parliamentarians to withdraw from the discussion, effectively ending it.

One of the Kurdish members of parliament told Shafaq that the disagreement centered on the cost of oil extraction in Kurdistan. He also said that to settle the matter, “a specialized international company would visit the KRG's oil fields to assess the cost of oil extraction, in line with the budget law amendment and a political agreement between the two sides.”

Deliveries of Kurdish crude oil have been suspended for over a year amid a dispute between the central government in Baghdad and Turkey over who had the power to authorize these deliveries. The impasse followed an International Chamber of Commerce ruling in March 2023. 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.

The ruling had an impact on international oil companies operating in Kurdistan, which suspended operations until they had clarity on any changes in their terms of operation in the region. There was also a dispute between the government in Baghdad and the one in Erbil over these oil deliveries and who gets to keep the money from their sales on international markets. Most of these have been settled but the deal has yet to be finalized.

By Charles Kennedy for Oilprice.com