Oil production in Iraqi Kurdistan set to resume following agreement

Foreign oil companies operating in Iraq’s Kurdistan region are preparing to resume oil production, with production set to restart within a month upon reaching an agreement on production costs. This announcement was made by Iraqi Prime Minister Mohammed Shia Al-Sudani on Tuesday.

The suspension of oil exports from northern Iraq via the Iraq-Turkey oil pipeline, which had been in effect since last March, stemmed from an arbitration decision issued by the International Chamber of Commerce (ICC) in Paris. The ICC ruling required Turkey to compensate Baghdad with $1.5 billion for damages resulting from the Kurdistan Regional Government’s (KRG) unauthorized oil exports between 2014 and 2018.

Notably, Turkey’s Minister of Energy and Natural Resources, Alparslan Bayraktar, disclosed in October that preparations are underway for the resumption of oil export operations through the Ceyhan port on the Mediterranean. The infrastructure is in place, signaling a forthcoming return to oil exports.

Senior officials within Iraq’s oil sector have confirmed that negotiations to reinstate oil exports from northern Iraq via the pipeline to Turkey remain ongoing. Furthermore, foreign companies operating in Iraqi Kurdistan have expressed their concern that the production costs proposed by the Iraqi government are notably lower than the actual production costs incurred in the northern oil fields.

According to the Association of the Petroleum Industry of Kurdistan (APIKUR), the oil sector has endured staggering losses, amounting to $7 billion, due to the suspension of the oil pipeline between Iraq and Turkey. This announcement marks a significant step towards resuming oil production and exports from this strategically vital region.