A breakthrough agreement between Baghdad, Erbil, and international oil companies is expected to be announced within 24 hours, potentially ending an 18-month halt in Kurdish crude exports through Turkey’s Ceyhan port. Local outlet Kurdistan24 reported that the Kurdistan Regional Government (KRG), Iraq’s Oil Ministry, and producing oil companies have agreed on volumes and procedures that would place roughly 230,000 barrels per day under the federal marketing authority SOMO, while another 50,000 bpd would supply the domestic market.
If implemented, the deal could restore a critical export stream that has been offline since March 2023, when Ankara shut the Iraq-Turkey pipeline after an international arbitration ruling ordered it to pay $1.5 billion to Baghdad for past unauthorized Kurdish shipments. The loss of export revenue has battered the KRG’s finances and complicated budget transfers from the federal government in Baghdad.
Yet, the decisive factor remains Turkey, which holds the final decision.
While Turkish Energy Minister Alparslan Bayraktar has said the pipeline is ready to operate, Ankara has tied resumption to broader terms, including mechanisms to ensure full pipeline utilization and protection from further legal exposure. Reuters recently reported that Turkey submitted a draft proposal to Iraq to renew and expand the 1973 pipeline agreement, signaling willingness but also pressing for concessions on arbitration liabilities and future revenue flows. At the same time, reports from earlier on Monday indicate that Ankara and Baghdad have reached an understanding to restart Kurdish exports, suggesting the final bottleneck may also have been cleared.
The agreement reached in Erbil suggests Baghdad and the oil companies have settled their differences over contract recognition and payment guarantees. If Turkey now endorses the framework and allows flows to resume through Ceyhan, more than 230,000 bpd could re-enter international markets. Without Ankara’s sign-off, however, Monday’s stated breakthrough risks becoming another in a series of announcements that fail to translate into exports.
By Charles Kennedy for Oilprice.com
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