Breakthrough: Oil Deal to Be Announced in 24 Hours, KRG Oil Exports to Resume

ERBIL (Kurdistan24) – After a crippling 18-month stalemate in talks regarding reaching an agreement to resume oil exports that has cost the Kurdistan Region and Iraq billions of dollars in lost revenue, a final and comprehensive agreement has been reached between the Kurdistan Regional Government (KRG), the Iraqi federal government, and international oil companies to resume the Kurdistan Region's oil exports.

In a major breakthrough, an informed source told Kurdistan24 exclusively that both the Federal Ministry of Oil and the KRG's Ministry of Natural Resources have exchanged official letters of consent, removing all remaining legal and technical obstacles.

A formal announcement of the landmark deal is now scheduled to take place within the next 24 hours, paving the way for the imminent restart of oil flows to the Turkish port of Ceyhan.

The breakthrough follows the arrival in Erbil on Monday morning of a delegation from Iraq's federal North Oil Company, which had been granted full authority to finalize the procedures for the resumption.

The delegation's successful meeting with the KRG's Ministry of Natural Resources appears to have been the final step in cementing the hard-won consensus.

According to the source, "apart from the announcement of the deal, there are no remaining legal or technical issues between the two ministries and the oil investment companies," and the export of the Kurdistan Region's oil will resume "shortly after the agreement is announced."

This successful conclusion of talks fulfills the expectations set just a day earlier by KRG spokesperson Peshawa Hawramani, who had announced on Sunday that a consensus had been reached after extensive negotiations. "The signing of the agreement is imminent, and if nothing unforeseen occurs, it will definitely be signed tomorrow," Hawramani had told Kurdistan24, a prediction that has now come to fruition.

Under the terms of the now-finalized agreement, the Kurdistan Region will hand over 230,000 barrels of oil per day to Iraq's State Organization for Marketing of Oil (SOMO) for export, while an additional 50,000 barrels per day will be allocated for domestic consumption within the region.

The oil destined for export is scheduled to be transported via the North Oil Company's infrastructure to the main export pipeline, which is why the company's technical delegation was in Erbil to finalize the operational details.

The agreement is set to end a suspension that has lasted over two years, which began in March 2023. The halt was triggered by a ruling from an arbitration court at the International Chamber of Commerce in Paris, which found that Turkey had violated a 1973 pipeline agreement by allowing the KRG to export oil independently between 2014 and 2018 without the consent of the federal government in Baghdad.

The court ordered Turkey to pay Baghdad $1.5 billion in compensation. Although Turkey has appealed the ruling, it has also expressed its readiness to facilitate the resumption of oil flows under a new, mutually agreed-upon framework.

The 18-month suspension has had a devastating impact on the economies of both the Kurdistan Region and federal Iraq. The KRG was deprived of its primary source of independent revenue, forcing it to rely on often delayed and politically fraught budget transfers from Baghdad to pay the salaries of its public sector employees.

For Iraq, the halt has meant the loss of a significant volume of oil exports at a time of fluctuating global energy prices. The ECO IRAQ Observatory, an independent economic monitoring group, has estimated that the suspension has cost Iraq over $11 million every single day, amounting to a staggering loss of more than $4 billion annually.

This chronic dispute, however, is far from a mere technical disagreement. As previously detailed by Kurdistan24, at its core lies what many in the Kurdistan Region view as Baghdad’s long-standing unwillingness to recognize the KRG’s constitutional rights under the 2005 Iraqi Constitution, which granted the region shared authority over its natural resources.

Instead of honoring these commitments, critics argue that successive Iraqi administrations have politicized oil exports, using them as a pressure tool and a form of financial blackmail against the people of Kurdistan by cutting salaries and withholding the region’s rightful share of the federal budget.

The failure to pass a comprehensive federal oil and gas law, despite two decades of promises, has left Iraq's energy sector mired in legal ambiguity and political maneuvering. The ECO IRAQ Observatory has held the Iraqi parliament directly responsible for this legislative paralysis, accusing it of "creating chaos" and allowing the dispute to fester.

The lack of a clear legal framework has not only strangled the Kurdistan Region’s economy but has also damaged Iraq’s international credibility, with foreign investors often viewing Baghdad’s unpredictable policies as a significant deterrent to long-term partnerships.

In recent months, pressure has intensified from all sides to find a lasting solution. International oil companies operating in the Kurdistan Region have been particularly vocal, as the export halt has rendered their significant investments unproductive.

Technical preparations for a restart have been underway for weeks. A source at the Khurmala oil field confirmed to Kurdistan24 that the pipeline from Khurmala to Kawergosk had recently undergone extensive testing, including cleaning, pump maintenance, and a comprehensive review of storage tanks. Workers at the oil field were informed over the weekend that exports were expected to resume within days.

The finalized agreement is seen as a critical step toward stabilizing the financial relationship between Erbil and Baghdad. KRG spokesperson Peshawa Hawramani emphasized that the deal is designed to remove the barriers that have consistently plagued the payment of public sector salaries in the Kurdistan Region, stressing that under its terms, the federal government must uphold its responsibility to disburse these funds without delay.

On Sunday, the Deputy Speaker of the Iraqi Parliament, Shakhawan Abdullah, also announced that agreements had been reached on both oil and non-oil issues, including the crucial matter of salary payments.

As the 24-hour countdown to the formal announcement begins, a palpable sense of resolution has replaced months of uncertainty. The agreement marks not just the reopening of a vital economic artery for both the Kurdistan Region and Iraq, but also represents a crucial, if hard-won, step toward a more stable and cooperative relationship between the two governments.

Correction: The report previously stated that oil exports from the Kurdistan Region were suspended for 18 months.