In a meeting chaired by Iraqi Prime Minister Mohammed Shia’ al-Sudani on Tuesday, the Council of Ministers approved a proposal to amend the Iraqi budget law, which could pave the way for the resumption of the Kurdistan Region’s oil exports.

On March 25, 2023, Kurdish crude exports through Turkiye were stopped after an international arbitration court ruled in favor of Baghdad against Ankara, halting 450,000 barrels per day of crude oil exports to international markets.

The approved amendment stipulates that the Federal Ministry of Finance will be responsible for compensating the Kurdistan Regional Government for these costs.

The compensation will apply to the quantities of oil produced in the Kurdistan Region and received by the Iraqi State Organization for Marketing of Oil (SOMO) or the federal Ministry of Oil.

Furthermore, the Council emphasized the urgency of delivering the oil produced in the Kurdistan Region to SOMO or the federal Ministry of Oil.

The amendment outlines that the federal Ministry of Finance will provide an advance compensation of $16 per barrel for production and transportation costs.

During the MERI Forum in Erbil on October 30, Kurdistan Region President Nechirvan Barzani said that Iraq has suffered a loss approaching $15 billion since the closure of the pipeline from the Kurdistan Region and called on Baghdad to approach this issue from an economic perspective.

“The prevailing situation in Iraq primarily involves service contracts, with certain areas, such as Gayara, incurring costs of approximately $26 to $27 for each barrel produced,” he said. “This raises the question of why companies are requesting only $20 for operations in the Kurdistan Region. This matter remains unresolved.

“In my opinion, the optimal solution would be to classify the oil from the Kurdistan Region as Iraqi oil, allowing it to enter the pipeline for export,” he concluded.