Iraq approves compensation plan to resolve Kurdistan oil dispute

BAGHDAD,— Iraq’s parliament on Sunday approved an amendment to its budget aimed at subsidizing production costs for international oil companies operating in the semi-autonomous Kurdistan region.

The move is seen as a step toward resolving the ongoing dispute over Kurdish oil exports, lawmakers said.

Under the approved amendment, the subsidy rate has been set at $16 per barrel, up from the previous proposal of $7.90 per barrel, which was rejected by the Kurdistan Regional Government (KRG) for being too low.

The decision is expected to help unblock oil exports from the north, a key issue that has been at the center of a nearly two-year dispute between the KRG and Iraq’s federal government.

The resumption of oil exports is anticipated to ease the economic difficulties in the Kurdistan region, where the halt in exports has caused delays in public sector salaries and reductions in essential services.

Kurdish lawmaker Rebwar Orhaman hailed the approval as an important step in resolving the dispute, saying it would help speed up the resumption of exports and boost Iraq’s revenues.

The Iraq Ministry of Oil, in coordination with the KRG’s Ministry of Natural Resources, will appoint an international consultant within 60 days to assess the fair costs of oil production and transportation.

Lawmakers and officials from the Ministry of Oil confirmed the process. However, if an agreement is not reached, the Iraqi cabinet will select a consultant without input from Kurdish authorities.

The budget amendment was first introduced by Iraq’s cabinet in November 2024. It also includes a provision that mandates the KRG to transfer its oil output to the state-run State Oil Marketing Organization (SOMO).

Oil exports through the KRG’s pipeline were halted in March 2023 by Turkey, following a ruling from the International Chamber of Commerce.

The ruling required Ankara to pay Iraq $1.5 billion for unauthorized oil exports by the KRG between 2014 and 2018.

Efforts to restart oil exports have been stalled, as negotiations between the KRG and Iraq’s federal government remain deadlocked due to competing demands.

Kurdistan region President Nechirvan Barzani on Monday described a crucial amendment to the federal budget bill, approved by the Iraqi parliament, as a “promising step” toward the resumption of the Kurdistan Region’s oil exports, which have been halted for almost two years.

“We welcome the parliament’s approval of the amendment to the federal general budget law and congratulate the parliament and all those involved in its drafting and approval,” Barzani said in a statement on X.

(With files from Reuters)