Kurdistan oil exports to resume in 2025 with new production cost agreement

"Previously, the KRG signed several agreements with the federal government regarding oil exports. However, the Iraqi budget law set oil extraction and transportation costs at $6 per barrel, which became a major obstacle to oil exports."

Acting Minister of Natural Resources Kamal Mohammed Salih. (Photo: Kurdistan24)
Acting Minister of Natural Resources Kamal Mohammed Salih. (Photo: Kurdistan24)

Nov. 19, 2024

ERBIL (Kurdistan 24) – Acting Minister of Natural Resources in the Kurdistan Regional Government (KRG), Dr. Kamal Mohammad Salih, revealed on Tuesday that Kurdistan's oil exports will resume at the beginning of next year, with barrel extraction costs set at $16.

In an interview with Kurdistan24, Dr. Salih disclosed that the suspension of Kurdistan's oil exports through Turkey's Ceyhan port has resulted in a significant $20 billion loss to the Iraqi state treasury.

"Previously, the KRG signed several agreements with the federal government regarding oil exports. However, the Iraqi budget law set oil extraction and transportation costs at $6 per barrel, which became a major obstacle to oil exports," Dr. Salih explained.

According to the Acting Minister, Erbil and Baghdad have now reached an agreement to amend the budget law, increasing oil extraction and transportation costs to approximately $20.6 per barrel. "In the initial phase, companies will receive around $16 per barrel," he stated.

The agreement includes provisions for an independent international consulting firm to audit oil extraction and export costs. "The firm will be given 60 days to determine the actual costs following the budget law amendment," Dr. Salih added.

He expressed confidence that the Iraqi Parliament would not obstruct the approval of the amended oil production and export costs for the Kurdistan Region, citing a political consensus reached between various parties. The Acting Minister anticipates the amendment's approval by the end of this year, with preparations to be completed and oil exports from the Kurdistan Region to resume in early 2025.

Dr. Salih confirmed that exports will continue through the Ceyhan pipeline, noting, "While Iraq has pipeline routes through Jordan and Syria, these are currently non-operational. Therefore, we have agreed to export through Turkey."

This development marks a significant breakthrough in the ongoing negotiations between Erbil and Baghdad over oil export arrangements and revenue sharing.