Shafaq News/ Baghdad and Erbil have reached common ground on managing the Kurdistan region's hydrocarbon resources, but disagreements with producers halt oil flow to Turkey, lawmaker Sabah Sobi said on Thursday.
Crude oil flows from northern Iraq to Turkey, halted for more than seven months, could start flowing again this week after Baghdad said it had reached "an understanding" with Istanbul.
"There are no disputes between the federal and regional governments on the resumption of oil exports through Turkish territory. All issues have been resolved, but the federal government has yet to settle things with foreign companies involved in oil extraction. Additionally, unresolved points persist between Baghdad and Ankara," the member of the parliament's oil and gas committee told Shafaq News Agency.
On a visit to Erbil on Sunday, Iraqi oil minister Hayan Abdul-Ghani said he expects to reach an agreement with the Kurdistan Regional Government (KRG) and foreign oil companies to resume oil production from the Kurdish region's oilfields within three days, signaling a potential restart soon.
Turkey had said last month the pipeline was ready to begin operations, but Iraq maintained it had received no official notification over the pipeline. Officials claimed that Baghdad was waiting to iron out "lingering financial and technical issues" ahead of any restart.
"The federal government has set a price tag of 8,500 Iraqi dinars only for each barrel, which is an irrational figure and far from the $22 a barrel needed to cover extraction costs, according to the current contracts. Extraction contracts in the Kurdistan region differ from those under federal jurisdiction and are classified as production-sharing agreements."
"The second round of negotiations between the federal government and the Turkish side has not commenced, encountering obstacles as Iraq requests $3 billion from Turkey, following the International Arbitration Court's decision in Paris."
Supplies of 450,000 barrels per day (bpd) were halted on March 25 after an International Chamber of Commerce (ICC) arbitration ruling.
The ICC ordered Ankara to pay Baghdad damages of about $1.5 billion for unauthorized exports by the semi-autonomous Kurdistan Regional Government between 2014 and 2018.
Transportation costs also play a significant role in hindering oil exports; as Sabhi pointed out, "the Turkish government demands $7 per barrel, and the transporting company requests $13 per barrel, making the total $20 per barrel for oil exported through Turkish territories, a matter that remains unresolved."
While Iraq, OPEC's second-largest oil producer, exports about 85% of its crude via ports in the south, the northern route via Turkey still accounts for about 0.5% of the global oil supply.