Iraq and Turkey on Monday began long-awaited discussions over resuming oil exports from the northern pipeline that runs through Turkey, an Iraqi Oil Ministry official told The National.
About 450,000 barrels of oil was trapped in Iraq’s Kurdish region in late March after the International Chamber of Commerce ruled on a long-standing complaint from Baghdad against unilateral exports by the region.
On April 4, a deal was struck between Baghdad and Erbil to allow the federal government to market the oil produced from the Kurdish region, and in exchange, the region will receive monthly budget transfers amounting to 12.67 per cent of Iraq's oil revenue. Baghdad and Ankara had been working to iron out technical hurdles.
A Turkish technical delegation arrived in Baghdad on Monday to meet their Iraqi counterparts, the official said. Oil ministers from both countries will not be involved, he added.
“A final decision is not expected today,” he said, adding that discussions could "last for days before reaching a final deal".
He gave no further details on the discussions.
The April deal between the federal government and Kurdistan stipulates that 400,000 barrels of oil a day will be exported from Kurdistan and handled by the federal State Organisation for Marketing of Oil (Somo). At least 50,000 barrels will come from Baghdad-run fields in the northern Kirkuk province, which were also affected by the pipeline closure.
For the first time, Kurdistan will be represented in Somo.
Oil revenues will be deposited in one bank account and will be overseen by Baghdad but will be under the control of the KRG.
The Federal Board for Supreme Audit of Iraq will have access to audit the account in co-operation with the Federal Oil Ministry and Kurdistan’s Ministry of Oil and Natural Resources and Audit Board. An international auditing company will be hired.
The rights to develop and market oil and gas resources has been one of the thorny issues since the US-led invasion that toppled Saddam Hussein.
The KRG had said Iraq's 2005 constitution gave it the right to sign agreements with oil companies and states without consulting Baghdad.
But Baghdad maintained the region had no right to sign deals and said exports had to go through state-run pipelines and be marketed by the federal government agency, Somo.
In February last year, Iraq’s Federal Supreme Court ruled that the Kurdish region's law regulating its oil and gas industry was unconstitutional. The court demanded that the region hand over all the industry’s activities to Baghdad.