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The Iraqi KRG is expected to submit its official response to Baghdad on Monday regarding a draft agreement that could reopen the Iraq-Türkiye pipeline and resume Kurdish oil exports suspended since March 2023, local media report.
A source familiar with the matter told Rudaw that the proposal is "in its final stages," suggesting a resolution to the prolonged oil revenue dispute may soon be reached.
Under the proposed agreement, the KRG will deliver all of its crude oil production—currently estimated at about 280,000 barrels per day—to the federal government. In exchange, Baghdad will supply 50,000 to 55,000 barrels of refined petroleum products daily to meet the KRG’s domestic consumption needs.
Although Iraq’s budget law mandates the KRG to transfer 400,000 barrels per day to qualify for its monthly fiscal allocation, the central government has reportedly been informed that actual production capacity falls short of that figure.
The Iraq-Türkiye pipeline has been shut since March 25, 2023, following an arbitration ruling in Paris that found Türkiye had breached a 1973 pipeline agreement by allowing the KRG to export oil without Baghdad’s consent.
The shutdown has resulted in over $25 billion in lost revenue for the KRG, according to Kurdish Prime Minister Masrour Barzani.
Talks have also included input from international oil companies operating in the region, which are demanding assurances over $900 million in unpaid debts. They have called for the Iraqi government to formally designate a party—either Erbil or Baghdad—as responsible for clearing the arrears.
The companies also requested that a recently introduced $16-per-barrel cost recovery fee be honored for 90 days while an international consultancy audits expenses, as mandated by Iraq’s amended federal budget.
Meanwhile, negotiations unfold amid heightened tensions between Baghdad and Erbil, following the federal finance ministry’s decision in May to freeze all transfers to the KRG over budget share disputes. The move has delayed salaries for more than 1.2 million KRG public employees. Officials indicate that if the draft agreement is approved, partial funding could resume as early as Tuesday.
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