Iraq Approves Compensation Plan to Resolve Kurdistan Oil Dispute
(Reuters) — Iraq’s parliament on Sunday approved a budget amendment to subsidize production costs for international oil companies operating in the semi-autonomous Kurdistan region in a move aimed at unblocking northern oil exports, lawmakers said.
The amendment sets the rate at $16 a barrel, up from an earlier proposal for $7.9 a barrel for transport and production costs, which was rejected as too low by the Kurdistan Regional Government (KRG).
The parliamentary approval marks a key step in resolving a nearly two-year dispute over Kurdish oil exports and in improving ties between Baghdad and Erbil.
The resumption of exports is also expected to ease economic pressures in the Kurdistan region, where the halt has led to salary delays for public sector workers and cuts to essential services.
"Parliament's approval is very significant to resolve oil dispute between Baghdad and Erbil and it will help expedite the resumption of Kurdistan oil exports to boost the country's revenues", said Kurdish lawmaker Rebwar Orhaman.
Iraq’s oil ministry, in coordination with the KRG’s Ministry of Natural Resources, will appoint an international consultant within 60 days to assess fair production and transportation costs, lawmakers and oil ministry officials said.
If no agreement is reached, the Iraqi cabinet will select a consultancy without input from Kurdish authorities.
The budget amendment was put forward by Iraq's cabinet in November 2024. It also demanded that the KRG transfer its oil output to the state-run State Oil Marketing Organization (SOMO).
Oil flows through the KRG's pipeline were halted by Turkey in March 2023 after the International Chamber of Commerce ordered Ankara to pay Baghdad damages of $1.5 billion for unauthorized exports by the KRG between 2014 and 2018.
Negotiations to restart exports have stalled amid conflicting demands from the KRG and Iraq’s federal government.
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