Delegations from Baghdad, Erbil convene for talks on resuming exports via SOMO

Shafaq News/ Delegations from the Kurdistan Region and Iraq's federal oil ministry held their first meeting on Sunday to reach an agreement on resuming oil exports from the Region through the state-owned SOMO company.

Omed Sabah, the Kurdistan Regional Government (KRG) cabinet secretary, said in a statement to Shafaq News Agency that the delegation discussed outstanding issues between the Erbil and Baghdad governments, as well as matters of common interest, with Oil Minister Hayan Abdul-Ghani and senior ministry officials.

Sabah added that the meeting touched on the dues of International Oil Companies (IOC) operating in the Region, the resumption of Kurdistan oil exports, production costs, and mechanisms for addressing these issues to reach a “comprehensive and balanced agreement within the framework of the constitution”.

The goal is to resume pumping through SOMO as soon as possible, he said.

On Saturday, a delegation from KRG and oil companies operating in Kurdistan arrived in Baghdad on an official visit at the invitation of the Iraqi Oil Ministry.

The ministry had called for a meeting "as soon as possible" on 29 May "for the purpose of… reaching an agreement to accelerate the restart of production and resume the export of oil… according to the quantities specified in the budget law."

Around 470,000 b/d of crude exports from Iraq's semi-autonomous Kurdistan Region have been absent from international markets since March 2023 when Turkiye closed the pipeline linking oil fields in northern Iraq to Ceyhan. That move followed an international tribunal ruling which said Turkiye had breached a bilateral agreement with Baghdad by allowing Kurdish crude to be exported without the federal government's consent.

Baghdad, however, is preconditioning the IOC's attendance at the Sunday meeting in Baghdad on them providing a copy of the production sharing contracts (PSCs) they have with the Kurdistan Regional Government (KRG), a source with knowledge of the matter said.

"Every IOC was invited and will make their own decision about attending," the source adds.

The IOCs have previously complained about being left out of the ongoing conversation between Erbil and Baghdad.

But this new development could further complicate the talks, especially since Baghdad considers those contracts illegal, null and void, according to a federal court ruling.

Baghdad also says it has "never seen" the IOC contracts. "The oil ministry does not have a copy of the IOCs' contracts with the KRG. We have never seen them," the oil ministry source confirmed to Argus.

Baghdad had earlier proposed a middle ground agreement that would see it amend its federal budget to allow it to pay IOCs operating in Kurdistan, in return for a compromise with the KRG and the IOCs over the recovery cost they claim for oil produced in the Kurdish region.

Prime minister Mohammed Shia al-Sudani said on 31 May his government has agreed to amend the budget law, but that the IOCs operating in Iraqi Kurdistan were refusing to amend their existing contracts with the KRG.

The Association of the Petroleum Industry of Kurdistan (Apikur), an industry body representing IOCs operating in the northern region, has denied those claims. Apikur in a statement published in May said its members would be willing to consider modifications to existing contracts provided the matter is agreed by Iraq's federal government, the KRG and the firms themselves.