SEATTLE (Oil Monster): Iraq has sent a high-level delegation to the Northern Kurdistan region in an effort to resume crude oil exports through Turkey.
The visit to Erbil follows heightened fears during the recent Iran-Israel conflict that Tehran could carry out its threats to shut the Strait of Hormuz, through which most of Iraq’si oil exports pass.
Baghdad Today news website and other Iraqi media outlets said the delegation would hold a series of meetings with Kurdish officials about reopening the 970km Kirkuk-Ceyhan pipeline that had shipped nearly 400,000 barrels per day of Kurdistan’s oil.
“The talks will cover a number of outstanding issues, mainly the resumption of oil exports through Turkey and the disbursement of wages to Kurdistan’s public servants,” the website said, quoting Ali Husssein, a leader in the Kurdistan Democratic Party, one of the largest parties that rule the semi-autonomous region.
Last week Iraq said it had decided to halt salaries to public servants in Kurdistan in an apparent retaliation to the signing of oil deals with two US companies.
Iraq’s finance minister Taif Sami said Baghdad has informed Kurdistan Regional Government (KRG) that it would not send salaries to public servants there on the grounds that KRG has overshot its budget share.
In a strongly worded statement last week, Iraq’s Ministry of Oil accused KRG of illegally selling oil abroad and causing heavy losses on the federal coffers.
The statement followed an attack on KRG by Baghdad in May over its finalising of oil pacts with a value of nearly $110 billion with two US companies. The ministry said the two US companies – HKN Energy and Western Zagros – violated Iraq’s constitution by signing those contracts with Kurdistan.
In 2022 Iraq’s Supreme Court ruled the Kurdish oil and gas law unconstitutional, asserting federal authority over oil exports.
Iraq, Opec’s second largest oil producer, has also been locked in a dispute with KRG over crude exports despite Kurdistan’s support for an initial agreement to subsidise production and transport of Kurdistan’s oil at a rate of $16 a barrel.
In February Iraq’s parliament approved a budget amendment to subsidies production costs for international oil companies operating in KRG in a move aimed at unblocking northern oil exports.
The amendment sets the rate at $16 a barrel, up from an earlier proposal for $7.9 for transport and production costs, which was rejected as too low by KRG.
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 unauthorised exports by the KRG between 2014 and 2018.
Courtesy: www.agbi.com