Losses From Suspending KRG Oil Exports Estimated at $21 Billion

Economy 03:48 PM - 2025-03-28

Kurdistan flag with oil pipelines.

The 277-page Paris ruling that halted the Kurdistan Region's oil exports has been in effect for two years, and the anticipated losses resulting from the ruling are estimated at $21 billion. Despite ongoing efforts by both the Iraqi government and the Kurdistan Regional Government (KRG) to resume oil exports from the Kurdistan Region, no amount of the Kurdistan Region's oil has been exported via Iraq's National Oil Marketing Company SOMO since the Paris ruling.

While the KRG, the Iraqi government, and even the Turkish government have been working to resume the export of the Kurdistan Region's oil for almost a year, no oil has been exported from the Region’s pipeline to outside of Iraq, despite the KRG formally turning over the oil exports to Baghdad on 2 April 2023.

Why were KRG's oil exports suspended?

The Turkish government was sued by the Iraqi government at the Paris International Chamber of Commerce. The lawsuit claimed that "Türkiye violated the 1973 oil pipeline transit agreement by exporting crude oil from the Iraqi Kurdistan Region without Baghdad's consent." In a 277-page decision published on 13 February 2023, the International Chamber of Commerce ruled in favour of the Iraqi government, which officially suspended oil exports to the Kurdistan Region on 25 March 2023.

Paris ruling to withhold KRG oil export and punishing Türkiye 

The Paris ruling states that although the KRG is a legitimate and constitutional government in Iraq, it is not permitted to export oil through pipelines since it is not a party to the 1973 Iraq-Türkiye Pipeline (ITP) agreement. In punishment for permitting the sale of oil from the Kurdistan Region through the pipeline, the Paris Court of Arbitration has mandated that Türkiye pay $1.5 billion in compensation to Iraq.

Damages of suspending KRG oil exports

Rebwar Mohammed Amin, an energy expert, told PUKMEDIA: "The Kurdistan Region can generate 286,000 barrels of oil per day. Assuming the quantity is sold at $73 per barrel, despite the fact that prices have risen above that level in the last two years, the total loss might be estimated at $20.878 billion per day and that's $626.34 billion monthly."

“According to the production contracts signed between the KRG and oil companies, the Kurdistan Region received 43% of the benefits, which amounted to 269 billion 326 million, and 200 thousand dollars. Foreign production companies account for 357 billion, 13 million, and 800 thousand dollars in monthly revenue,” said Amin.

Iraq was against the export of oil from the Kurdistan Region

The KRG began work on the Kurdistan oil pipeline in 2010, and in late 2013, it began exporting oil to Türkiye for the first time. It was then carried to the port of Ceyhan via the Iraq-Türkiye joint pipeline before being shipped to international markets.

The move sparked disputes between the Iraqi and Turkish governments over ownership of the pipeline, with the Iraqi government filing a lawsuit against Türkiye in Paris in 2014 and winning the case in 2023, effectively halting oil exports from the Kurdistan Region.

The KRG handed over its oil file to Baghdad

The KRG officially handed over its oil exports to Baghdad on 2 April 2023. While the KRG, the Iraqi government, and even the Turkish government has been working to resume the export of the Kurdistan Region's oil for almost a year; no oil has been exported from the Region’s pipeline to outside of Iraq, despite the KRG formally turning over the oil exports to Baghdad on 2 April 2023.

The United States has recently even vowed to sanction Iraq if the Kurdistan Region's oil exports are not resumed; however, despite all these efforts, no amount of oil has been exported from the Kurdistan Region through SOMO.

There are three main problems facing the Kurdistan Region's oil exports

Ali Mashkur, a member of the Oil and Gas Committee of the Iraqi Parliament, told the media: "No precise date has been set for the oil exports to resume, but efforts to export oil from the Region continue."

He added: "There are three major issues with oil exports; consultancy companies, consumption of oil within the Kurdistan Region and the formation of  committee to audit the amount of oil exported."

International efforts to resume the Kurdistan Region's oil exports

The United States has called on Iraq to speed up the resumption of the Kurdistan Region's oil exports.
At the daily press briefing on Wednesday, 19 March 2025, the United States' Department spokesperson Tammy Bruce told reporters: "We're urging the Iraqi Government to reach an agreement ... with the international oil companies to resume oil exports through the Iraq-Türkiye pipeline as soon as possible, and to honour the existing contracts with U.S. companies. So we're—part of the issue. Reopening the ITP ensures Iraqi oil can reach global, especially European markets. Iraq benefits from the stability of resilient supply chains, as we all do."

Oil exports between the Kurdistan Region and Iraq

The KRG wants to control the Kurdistan Region's oil resources and keep the revenues for the Region, and calls on the international oil companies to sign agreements with the KRG, which is allowed by the Iraqi constitution, as the constitution allows the Region to have its own financial independence.

However, the Iraqi government demands that all oil be exported through the Iraqi National Oil Company (SOMO) and wants the oil revenues to go back into the state budget, and then provide a share to the Kurdistan Region according to the agreement between the two sides. It also called for the establishment of a committee to monitor and produce oil exports in the Kurdistan Region to ensure transparency.

Türkiye's stance on the export of oil from the Kurdistan Region

Türkiye demands that the legal issues between Iraq and the Kurdistan Region be solved, as Türkiye suffered significant financial losses as a result of the pipeline's suspension, in addition to the $1.5 billion punishment imposed by the Paris Court.



PUKMEDIA