Baghdad, Erbil Poised to Finalise Oil Export Agreement

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Iraq's State Organisation for Marketing Oil (SOMO) has confirmed that an agreement to resume oil exports from the Kurdistan Region is imminent, with a clear mechanism now established for pumping and managing the Region’s oil.

SOMO Director Ali Nizar, quoted by Iraq’s state media (INA), said: “Great efforts have been made over the past months to reach an agreement between Baghdad and Erbil. The Ministry of Oil, through its departments and companies including SOMO, worked closely with the Kurdistan Region’s Ministry of Natural Resources, alongside international oil producing firms, to make this happen.”

He added that “the agreement has reached its final phase.” He also noted that a strict mechanism for implementation and pumping has been set up, and once all details are finalised and documented in writing, exports can begin.”

“International companies have also been given assurances over payment of their dues after the export process,” he said.

The Iraqi Council of Ministers, led by Prime Minister Mohammed Shia' Al Sudani, is expected to address the Kurdistan Region’s public sector salaries in a session on Tuesday, 23 September 2025, in parallel with discussions on the new oil export arrangement.

The agreement, finalised after two months of negotiations, resolves long-standing disputes between Baghdad and Erbil.  The deal raises payments to foreign operators—granting them oil shares instead of direct cash transfers—and marks a significant step forward. 

The deal would end more than two years of deadlock following the halt of exports through Türkiye’s Ceyhan pipeline in March 2023, after legal and technical disputes.

Exports through Türkiye’s Ceyhan port were halted in March 2023, following an arbitration ruling by the International Chamber of Commerce in Paris. The tribunal determined that Türkiye had breached a 1973 pipeline transit agreement by permitting the Kurdistan Regional Government (KRG) to export crude independently of Baghdad.

Experts expect exports through Türkiye’s Ceyhan port to restart at around 100,000 barrels per day, with capacity gradually rising to 300,000 barrels once technical and logistical preparations are completed and final arrangements with Ankara are in place.

Under the deal, the Kurdistan Region will produce 280,000 barrels per day, of which 50,000 barrels will be allocated for domestic consumption. The remaining 230,000 barrels will be delivered to SOMO for marketing and export.

Disputes between Baghdad and Erbil over the Kurdistan Region’s share of the federal budget have persisted for years, directly impacting public sector salaries. Over the past eight months, the federal government has transferred funds for only six salary payments in the Kurdistan Region.



PUKMEDIA