Iraq’s cabinet announced Tuesday that the semi-autonomous Kurdish region must immediately transfer its oil production to Iraq’s state-run oil marketing company, SOMO. This directive, which aims to consolidate national control over oil exports, is accompanied by budget measures to reimburse the Kurdish government for production and transportation costs, with a fixed rate of $16 per barrel for foreign companies operating in Iraqi Kurdistan.
Background on the Oil Dispute and Pipeline Closure
This latest move follows Turkey’s halt of oil exports through the Kurdish region’s pipeline in March last year. The closure came after the International Chamber of Commerce ordered Turkey to pay Iraq $1.5 billion in damages, citing unauthorized Kurdish oil exports from 2014 to 2018. The ruling concluded that Turkey had violated a 1973 treaty by facilitating Kurdish oil exports without approval from Iraq’s federal government.
Since the arbitration, efforts to restart the pipeline have stalled due to differing demands from the Kurdish Regional Government (KRG), foreign oil companies, and the federal government.
Budget Measures and Technical Consultations
In a coordinated effort to resolve ongoing conflicts over production costs, Iraq’s oil ministry, alongside the KRG’s natural resources ministry, plans to appoint an international technical consultant within 60 days. This consultant will assess fair costs for oil production and transportation across various fields. Should the parties fail to agree on costs within the set timeframe, Iraq’s cabinet will independently select a consulting firm to finalize the estimates.
Foreign Companies and Contract Revisions
The Iraqi government attributed delays in resuming oil exports partly to foreign companies and the KRG, which have not yet submitted their contracts for review by Iraq’s federal oil ministry. Additionally, the companies have demanded higher production costs, which Iraq’s government has so far declined.
The cabinet’s directive represents Iraq’s broader goal to assert federal control over oil resources, aiming for a more unified and regulated approach to its vital oil industry.
Stay connected to know more on arcnews.online for global news like Iraq Orders Kurdish Region to Transfer Oil Production to State-Run SOMO. For videos updates visit our YouTube. Do subscribe to Arcnews to get latest updates directly in your mail box.
Have A Great Day.
