The ongoing negotiations between the Kurdistan Regional Government (KRG) and the Federal Oil Ministry face significant hurdles, primarily regarding the re-exportation of oil from the Kurdistan Region to Baghdad. The core issues, including the fate of 115,000 barrels of oil, the advisory nature of cost determination, and outstanding debts, have yet to be resolved. A deadline has been set for the two governments to agree on the appointment of an international consultancy firm, which expires in one week, or the matter will be escalated to the Prime Minister’s office for resolution.
The last meeting between the KRG delegation and Iraqi federal officials took place on March 20, 2025, where the discussions focused on resolving the oil export complications and determining the financial entitlements of oil companies that have not yet been fully addressed. Three key obstacles hinder the final agreement on the matter.
The first issue pertains to the amount of oil Baghdad is prepared to accept from the Kurdistan Region. While the Iraqi budget law mentions 400,000 barrels of oil per day, Baghdad is only capable of receiving 300,000 barrels. Meanwhile, the KRG insists that 115,000 barrels be allocated for domestic use, treating this quantity as part of the exported oil.
The second point of contention concerns the payment terms agreed upon earlier. Under the existing arrangement, Baghdad is supposed to pay $16 per barrel for 185,000 barrels of oil per day. However, the Kurdistan Region argues that it cannot deliver 400,000 barrels, and the 115,000 barrels used for local consumption should be handled by Baghdad’s Oil Ministry financially.
Thirdly, the consultancy tasked with determining the cost of production and transportation of oil has yet to be finalized. Oil companies are demanding compensation for financial entitlements due before the suspension of oil exports in 2023, but Baghdad maintains that Erbil is responsible for the outstanding debts.
The Iraqi Parliament passed a budget amendment on February 2, 2025, that facilitated the resumption of oil exports from Kurdistan. This amendment, effective from February 17, set the temporary cost of oil production and transportation at $16 per barrel until the consultancy is appointed. The amendment stipulates that the two governments have 60 days to reach an agreement, with a final deadline of April 17, 2025, for the selection of the advisory firm. If no agreement is reached by this time, the issue will be referred to the Prime Minister, who will be tasked with taking necessary steps to implement the provisions.