On February 2, 2025, the Iraqi Parliament approved an amendment to the national budget aimed at resolving a dispute between the Kurdistan Region and the federal government in Baghdad regarding the export of oil from the region. This amendment is expected to facilitate the resumption of oil exports that have been halted for nearly two years.
The amendment stipulates that the Kurdistan Regional Government will receive compensation for the costs of producing and transporting oil to the federal government. Kurdish MP Saban Shirwani stated that this decision would help in resuming oil exports, which were suspended since March 2023 following an international arbitration ruling favoring Baghdad.
Turkey has not resumed oil export operations through the Ceyhan port since it closed the pipeline in 2023, after an arbitration court ordered Ankara to pay approximately $1.5 billion in compensation to Baghdad for unauthorized oil exports from the Kurdistan Region. A source close to the government indicated that the situation still depends on negotiations between Baghdad, Erbil, and oil companies, as well as Turkey's cooperation.
The Iraqi Ministry of Oil has expressed that Turkey is open to resuming exports, as it would benefit from export fees and the operation of the Ceyhan port. In November 2024, the federal government agreed to form an international technical advisory body with the Kurdistan government to determine the costs of production and transportation to be paid to oil companies in the region.
The amendment sets the compensation for production costs at $16 per barrel, an increase from a previous proposal of $7.9 per barrel, which was rejected by the Kurdistan Regional Government as too low. The Iraqi Ministry of Oil will coordinate with the Ministry of Natural Resources in the Kurdistan Region to appoint an international consultant within 60 days to assess fair production and transportation costs.
The resumption of oil exports is expected to alleviate economic pressures in the semi-autonomous region, where the halt in exports has delayed public sector salary payments and reduced funds allocated for essential services. Previously, the Kurdistan Region was exporting 450,000 barrels of oil daily through the Turkish port without federal government approval, leading to an estimated loss of $20 billion due to the export stoppage.