Iraq’s government is studying options for amending its budget in order to be able to pay foreign companies operating oil fields in Kurdistan in a bid to restart the flow of oil from the northern semi-autonomous region.
“We are discussing the draft amendment of the relevant article along with the parliamentary financial committee,” Prime Minister Shia al-Sudani told Bloomberg, adding that companies operating in Kurdistan “are waiting for the amendment to be done on this article in order to be able to pay for the production cost.”
Iraq is currently exporting oil only via its southern oil export terminals, with around 450,000 bpd of exports from the northern fields in Kurdistan shut in since March due to a dispute over who should authorize the Kurdish exports.
The impasse followed an International Chamber of Commerce ruling in a dispute between Turkey and Iraq regarding Kurdistan oil. The ICC ruled in favor of Iraq, which had argued that Turkey should not allow Kurdish oil exports via the Iraq-Turkey pipeline and the Turkish port of Ceyhan without approval from the federal government of Iraq.
Since then, attempts have been made to resume exports by finding some common ground for organizing the approval process but none has produced an actual result. Technically, Kurdish oil flows to Turkey should be able to resume since Turkey reopened the pipeline earlier in October. Despite this, there has been no forward movement and the real struggle now remains between the Iraqi federal government and the Kurdistan Regional Government.
Last month, hopes about a deal were renewed when Iraq’s oil minister Hayan Abdel-Ghani visited Erbil to discuss the matter with the Kurdistan Regional Government. "First step is to agree with the region and companies on adjusting their existing contracts to be consistent with Iraq's constitution. We could reach a deal in three days," Abdel-Ghani said at the time.
By Charles Kennedy for Oilprice.com
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