Iraq Facing Over $4 Billion Annual Loss from Halted Kurdistan Oil Exports: Economic Observatory

AP

An oil pipeline in Kirkuk province.

The Iraqi Economic Observatory has warned that the suspension of oil exports from the Kurdistan Region is costing Iraq an estimated $11.16 million in daily revenues, amounting to more than $4 billion annually.

According to the Observatory, the extraction and transportation costs amount to approximately $16 per barrel, with an additional $1.50 per barrel for delivery to the Turkish port of Ceyhan. Based on an export capacity of 230,000 barrels per day at $66 per barrel, the net profit from Kurdistan’s oil exports would reach $11.16 million per day. On an annual basis, this equates to more than $4 billion in lost income.

The Observatory also revealed that monthly losses are calculated at $334 million, undermining state revenues at a time of rising budgetary pressures.

The long-running dispute over oil exports from the Kurdistan Region remains unresolved despite repeated rounds of negotiations between Baghdad, Erbil and Ankara. Economists warn that the deadlock is exacerbating Iraq’s fiscal deficit and undermining its development plans.

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.

The pipeline has since been shut down, awaiting an agreement between the Iraqi federal government and the KRG. Negotiations have since faltered, hindered by disagreements over revenue-sharing, non-oil income, and the terms of contracts with international oil companies.

The prolonged suspension has dealt a heavy blow to the Kurdistan Region’s economy, curtailed Iraq’s overall export capacity, and placed mounting strain on the budgets of both administrations.



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