Iraq’s parliament passed a long-awaited plan to boost payments to oil companies in the semi-autonomous Kurdistan region, a step toward resuming exports from the area that were halted almost two years ago.
The assembly on Sunday voted in favor of a plan approved by the cabinet in November that would amend the budget to allow Baghdad to pay out $16 a barrel for oil production and transportation, according to a statement.
While that moved forward Iraq’s negotiations for a deal with the Kurdistan Regional Government, it was still below the $26 a barrel that Iraqi Prime Minister Mohammed Shia Al-Sudani has said oil firms get from their current contracts in the region.
Cost disputes have held up a full restart of flows from Kurdistan, keeping about half a million barrels a day of supply away from global markets. The exports were previously sent via pipeline to the Mediterranean port of Ceyhan in Turkey.
Restarting the conduit may pose a dilemma for Baghdad, which is obligated to reduce crude output as part of an OPEC+ agreement, but has been struggling to adhere to promised cutbacks. Iraq is looking to increase revenues to rebuild its shattered economy.
The impasse kicked off in March 2023 after Turkey halted the pipeline following an arbitration court’s order to pay Iraq $1.5 billion. Ankara, which claimed the pipe was shut because it needed repairs after two massive earthquakes in February that year, later said that it was ready for operations and it was up to Iraq to resume flows.
That never happened as Iraq sought to take full control of the Kurdish output. The federal government and oil companies working in the country’s north, including DNO ASA, Genel Energy Plc and Gulf Keystone Petroleum Ltd., blamed each other for the delays.
Source: By Khalid Al-Ansary & Salma El Wardany from Rigzone.com