Baghdad, Erbil agree on new mechanism to sell oil

After long disagreements, it seems that the federal government and the regional government finally agreed on a joint mechanism to sell Kurdistan’s oil.

Sources revealed that representatives of the Kurdistan region and the federal government, during a meeting held on Friday in Baghdad, agreed on a new mechanism to jointly sell oil, Rudaw News reported.

Other meetings will be held to agree on oil contracts for the Kurdistan region, and jointly find new buyers for oil from the Turkish port of Ceyhan, in addition to the existing buyers, in a move that would reassure the producing companies and the buyers of the region’s crude, Rudaw News mentioned.

All companies buying the region’s oil have been informed of the need to sign new contracts, as oil will be sold from now on according to international prices, and not at a discount of 10 USD per barrel, as was the case in the past.

With this step, Kurdistan’s oil will be sold at the same price at which the State Organization for Marketing of Oil (SOMO) sells crude, with the approval of the federal government.

This agreement took place after Baghdad won last month an international arbitration case, which led to the suspension of the Kurdistan region’s exports of crude oil through the Turkish port of Ceyhan.

Kurdistan exports oil through its pipeline on the northern Iraqi border, where it enters Turkey and pumped to the Turkish port of Ceyhan on the Mediterranean coast.

Kurdistan began exporting crude oil away from the federal government in 2013, but Baghdad repeatedly denounced this behavior.