Iraq’s federal government and the Kurdistan autonomous region signed an accord on Tuesday to allow Kurdish oil exports to resume through Turkey after they were halted 10 days ago, Agence France-Presse reported, citing officials.
The agreement, signed in Baghdad in the presence of Prime Minister Mohamed Shia al-Sudani and Kurdish premier Masrour Barzani, was to be implemented “today,” a Kurdish regional government official told AFP.
The deal comes two days after Iraq, Saudi Arabia and several other major oil exporters announced a sharp reduction in their production from May that has sent up oil prices.
Barzani said on Twitter that the deal is “temporary” until parliament agrees a new oil and gas law, but he called it “a crucial step towards ending the long-standing dispute” between Arbil and Baghdad.
The deal, thrashed out in talks between federal and regional officials, spells the end of independent oil exports by the Kurdish regional government and marks a clear limit to its autonomy.
Ankara had stopped handling Iraqi Kurdish oil last month after an international tribunal ruled in a nine-year-old dispute that Baghdad was right to insist on overseeing all Iraqi oil exports.
Sales of Kurdistan crude will be managed from now on by the State Oil Marketing Organization, a federal government official and a Kurdish official told AFP.
A joint committee formed by the federal and regional governments will supervise the export process, they added.
Revenues will be paid into an account under the control of the Kurdish government which will be overseen by Baghdad, they said.
The halt to exports through a pipeline to the Turkish Mediterranean port of Ceyhan had left foreign oil firms with nowhere to pump Kurdish oil.
Norway’s DNO, one of the main firms operating in Iraqi Kurdistan, announced it was halting production at its wells.
Prior to Ankara’s action on March 25, the autonomous region was exporting roughly 450,000 barrels per day (bpd) of crude.
Oil exports are the key revenue source for both the federal and regional governments and their management has long been a sensitive topic in relations.
The Kurdistan government sees Baghdad as trying to profit from the region’s resources, while the Iraqi government argues it should enjoy sovereign control over all of the country’s oil production.
Iraq, the second largest producer within the Organization of the Petroleum Exporting Countries (OPEC), exports an average of 3.3 million bpd.