SOMO Chief Tells Kurdistan24: Oil Export Deals Sealed as Baghdad–Erbil Talks Move Forward

ERBIL (Kurdistan24) — The Director General of Iraq’s State Oil Marketing Organization (SOMO), Ali Nazar, told Kurdistan24 on Saturday that agreements and contracts concerning the resumption of oil exports from the Kurdistan Region have been finalized.

Nazar emphasized that the Ministry of Natural Resources has made every effort to facilitate the restart of exports soon, adding that SOMO expects shipments to resume shortly.

Iraqi Foreign Minister Fuad Hussein, speaking during a press conference in Baghdad, also confirmed that talks between Baghdad and Erbil on oil export have made “significant progress.”

He noted that the disagreements were not between the Kurdistan Regional Government (KRG) and the federal government, but rather involved oil companies seeking guarantees and financial terms for their participation.

According to Kurdistan24 correspondent Shvan Jabari, oil companies operating in the Kurdistan Region have presented two major demands: first, that Baghdad provide between $1 to $3 per barrel to cover transport costs for moving oil from Kurdistan’s fields to the Turkish port of Ceyhan; and second, that Baghdad guarantee contractual arrangements before exports resume.

The federal Oil Ministry has insisted that the KRG sign these agreements with the companies before moving forward.

Prime Minister Mohammed Shia al-Sudani has ordered Iraq’s legal authorities to participate in the ongoing negotiations, with the matter expected to reach the Council of Ministers meeting on Tuesday.

If Erbil and Baghdad fail to finalize an agreement, Sudani is prepared to either task the State Council with finding a legal resolution or refer the dispute to the Federal Court.

On the issue of oil revenues, Jabari reported that the KRG is committed under Iraq’s three-year budget law to transfer 50 percent of its non-oil revenues to Baghdad. However, the federal government has recently demanded that all customs and tax revenues from the Kurdistan Region be handed over, in addition to oil revenues, before redistributing 50 percent back to the KRG.

Erbil considers this approach unconstitutional, accusing Baghdad of limiting transfers to salaries only rather than full budget allocations, thereby leaving a portion of Kurdish public employees unpaid.

Negotiations over these issues have continued for weeks. Last week, KRG delegations held multiple meetings in Baghdad with the federal Ministries of Finance and Oil, joined by representatives of producing companies, but no final breakthrough was achieved.

The Council of Ministers is set to deliberate on the matter again on Tuesday, with officials warning that if no resolution is reached, salary payments for July and August in the Kurdistan Region could face further delays.

On Saturday, Col. Myles B. Caggins III, spokesperson for the Association of the Petroleum Industry of Kurdistan (APIKUR), told Kurdistan24 that more than two and a half years have passed since the last oil exports from the Kurdistan Region, and so far, no official agreement has been reached to resume the shipments.

Coggins noted that the KRG Ministry of Natural Resources, the federal oil authorities, and oil companies—including APIKUR and SOMO—have continued discussions aimed at reaching a formal written agreement. He emphasized that all companies represented by APIKUR are calling for a signed agreement with Baghdad before resuming any oil exports.

He also revealed that there had been efforts by the U.S. government to encourage Iraq’s Prime Minister to push for a written agreement to restart the Kurdistan Region’s oil exports. Regarding the companies themselves, Coggins stated that each company decides independently when to resume shipments, but APIKUR has consistently emphasized the necessity of a formal agreement.

Coggins further highlighted that the companies seek to ensure that their rights and entitlements are protected and that their financial terms under the agreements are fully respected.

The dispute over oil exports between the KRG and the federal government in Baghdad has persisted for more than a decade, rooted in competing interpretations of Iraq’s constitution and revenue-sharing mechanisms.

Article 112 of the Iraqi Constitution stipulates that oil and gas management should be shared between federal and regional authorities, yet in practice, Baghdad claimed the right to independently market crude oil, depriving the KRG of its right to enjoy an economic independence. 

A central element of the dispute has been the Kirkuk–Ceyhan pipeline, which transports oil from northern Iraq, including the Kurdistan Region, to Turkey’s Mediterranean port of Ceyhan. For years, the KRG exported oil independently through this route, which led to escalating political and legal disputes.

In March 2023, the Paris-based International Chamber of Commerce ruled in favor of Baghdad in its arbitration case against Ankara, ordering Turkey to halt oil flows from the KRG without federal approval. Since then, exports through Ceyhan have remained suspended, causing significant revenue losses for both Erbil and Baghdad.

Iraq’s three-year federal budget (2023–2025) sought to regulate the dispute by requiring the KRG to transfer 50 percent of its non-oil revenues to Baghdad and hand over control of oil exports to SOMO. In exchange, Baghdad pledged to cover the salaries of public employees in the Kurdistan Region.

However, disagreements over the scope of revenue transfers and the failure of Baghdad to release funds on time have deepened mistrust. The KRG argues that Baghdad is only sending partial salary payments rather than its fair share of the federal budget, creating recurrent financial shortfalls.

International oil companies operating in the Kurdistan Region, such as Genel Energy, DNO, and Gulf Keystone, have been reluctant to resume exports without financial guarantees. They seek compensation for transport costs, as well as binding contractual commitments recognized by the federal Oil Ministry.

Baghdad, for its part, has been cautious about making concessions that could be interpreted as legitimizing past independent sales by the KRG.

For Prime Minister Mohammed Shia al-Sudani, resolving the dispute is crucial to maintaining political stability, as Kurdish parties are an essential part of his governing coalition. For the KRG, resuming oil exports is vital to easing its ongoing fiscal crisis, which has left civil servants unpaid for months.

The broader issue also carries regional implications, as Turkey has signaled its willingness to reopen the pipeline only once Baghdad and Erbil reach a legally binding framework.

With the Council of Ministers set to deliberate on the matter again, the coming days may prove decisive. A breakthrough could pave the way for the resumption of Kurdistan oil exports — estimated at around 450,000 barrels per day before the suspension — while failure risks prolonging the financial squeeze on the Kurdistan Region and fueling further political friction between Erbil and Baghdad.

This article has been updated.