Iraq aims to reach deal on 'resuming Kurdistan oil output in three days'

Country has reached understanding with Turkey to resume northern oil exports, minister says

Baghdad says northern oil exports from the Kurdish region could soon resume through the Iraq-Turkey pipeline. AFP

Iraq expects to reach an agreement with the Iraqi Kurdistan Regional Government and foreign oil companies to resume crude production from the northern oilfields within three days, Oil Minister Hayan Abdel Ghani said on Sunday.

The country has reached an "understanding" with Turkey to resume northern oil exports through the Iraq-Turkey pipeline, Mr Abdel Ghani said on a visit to Erbil, the capital of Iraq's semi-autonomous Kurdistan.

In late March, Turkey halted 450,000 barrels per day of oil produced in the region after an arbitration court ruled in favour of Baghdad, saying Ankara had breached a 1973 agreement by allowing Kurds to pump oil without Iraqi consent.

The court ordered Ankara to pay Baghdad damages of about $1.5 billion for unauthorised exports by the Kurdistan Regional Government between 2014 and 2018.

No oil from the region has since been exported.

Mr Abdel Ghani and federal oil officials were on Sunday meeting representatives of the Kurdish Ministry of Natural Resources and senior energy officials to discuss the matter.

"The purpose of this meeting is to resolve all issues to facilitate resumption of oil production and exports," Mr Abdel Ghani told reporters in Erbil.

"First step is to agree with the region and companies on adjusting their existing contracts to be consistent with Iraq's constitution. We could reach a deal in three days."

The latest meeting comes after Iraqi government oil officials met representatives of the Association of the Petroleum Industry of Kurdistan on Wednesday to discuss the resumption of flows to Turkey.

The association's members include international oil and gas companies with a direct or indirect interest in upstream oil or gas contracts in Iraq's Kurdistan region. Many of the companies have had to stop output because of the pipeline closure.

The stoppage has had serious consequences, including layoffs, as producers have been forced to reduce output, while the regional government has been unable to dispense full salaries and social service payments.

The oil sector accounts for 80 per cent of income for the Kurdish region, the Association of the Petroleum Industry of Kurdistan estimates.

Oil exports generated an average of $733 million a month during the first quarter of this year, according to Kurdistan Regional Government figures.

- With reporting from Reuters