Tripartite Deal on the Verge: Kurdistan, Baghdad, and Oil Firms Near Agreement to Resume Exports

Kurdistan 11:42 AM - 2025-09-22

Resuming Oil Exports Marks Key Step Toward Resolving Kurdistan-Baghdad Issues.

A tripartite agreement is anticipated to be signed today, Monday, 22 September 2025, between the federal government, the Kurdistan Regional Government (KRG), and the Region’s oil-producing companies, to resume oil exports via Türkiye’s port of Ceyhan, following a suspension of more than two years after a ruling by the International Court of Arbitration in Paris.

Once finalised, the agreement will be submitted to the Iraqi Council of Ministers for approval tomorrow, Tuesday, representing a key step towards addressing the salary issues of Kurdistan Region employees.

Employees and retirees in the Kurdistan Region are hopeful that a deal between the Region and Baghdad over oil and non-oil revenues will resolve the long-standing salary problem. To date, only six salaries have been paid this year, with September nearly over, and no timeline has been established for disbursing the remaining months’ payments.

The possibility of an agreement is closer than ever. Reuters recently reported that Iraq had initially agreed to a plan for resuming oil exports from Kurdistan via the Turkish pipeline to Ceyhan. An executive from an international oil company noted: “We have intensified discussions and are closer to a tripartite agreement than ever before because all parties are demonstrating flexibility.”

Under the preliminary plan, the KRG would deliver at least 230,000 barrels per day to the State Oil Marketing Organisation (SOMO), retaining 50,000 barrels per day for domestic use. An independent trader would handle sales at SOMO’s official prices from Ceyhan. Of the proceeds from each barrel, $16 would be placed in an escrow account and distributed proportionally among the producers, with the remainder going to SOMO. However, the plan does not yet clarify how or when producers will receive the $1 billion in unpaid arrears accumulated between September 2022 and March 2023. Luke Clements, CFO of Genel Energy, stated at a conference in Oslo last week that significant progress has been made in drafting agreements to resume exports via the pipeline.

Increased Production

The agreement between the federal government, the KRG, and international oil companies could raise supplies by at least 230,000 barrels per day (bpd), at a time when OPEC members are boosting production to reclaim market share. Iraq, the second-largest OPEC producer, exports roughly 3.4 million bpd from its southern ports, but the northern Kirkuk-Ceyhan pipeline has been closed since 25 March 2023, following a Paris arbitration ruling that Türkiye must pay Iraq $1.5 billion in compensation for unauthorised oil exports between 2014 and 2018. Türkiye is appealing the decision.

While Ankara has expressed readiness to resume exports, flows remain halted due to ongoing legal and political disputes between Baghdad, the KRG, and international oil companies operating in the Region.

Substantial Losses Due to the Halt

The Echo Iraq Observatory, specialising in economic analysis, has calculated daily losses of $11.16 million resulting from the halt in Kurdistan Region oil exports, attributing the losses to parliamentary inaction. According to a statement obtained by PUKMEDIA, the Kurdistan Region should be exporting approximately 230,000 barrels of crude daily, alongside allocating 50,000 barrels for domestic consumption.

The Observatory detailed that the cost of extraction and transport is roughly $16 per barrel, while delivery to Ceyhan costs Türkiye an additional $1.50 per barrel. Based on a price of $66 per barrel, net daily profit from exporting 2,300,000 barrels would be about $11.16 million. Consequently, Iraq is losing an estimated $334 million per month and over $4 billion annually due to the ongoing suspension of exports.



PUKMEDIA