 Is this the team working out the difference to 26$a. Barrel drilling costs. ?
Parliamentary Committee: Mechanisms for selecting international advisory on KRG's oil
Local Yesterday, 19:39
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INA - BAGHDAD
The Parliamentary Legal Committee clarified on Tuesday the mechanism for selecting the international advisory committee on the issue of the region's oil, indicating that amending the budget law will solve many problems between Baghdad and Erbil.
"Parliament's approval of the proposed draft law to amend the budget indicates a clear indication that there is an objective treatment of the issue of oil production and delivery that was pending between the center and the region," said the Committee member Muhammed Anouz to the Iraqi News Agency - INA.
He added, "The text of the amendment stipulates the selection of an international advisory committee with the approval and selection of the Federal Ministry of Oil and the Ministry of Natural Resources in the Kurdistan Region within a specific period, and if a dispute occurs regarding the selection between the two parties, the Cabinet will have to take action and select the company that will perform this role. This will depend on one of the indicators that reassure us that the dispute will not continue or prolong."
"The Legal Committee continues to follow up on all laws and procedures related to the country in various regions. This is a general national responsibility. The stability of the relationship between the region and the center is everyone's responsibility. Responding to the region's needs and the center's proposals is also a general national duty," he included.
Anouz pointed out that "giving the advisory committee the opportunity to reach a solution that secures the region's needs and ensures that there is no discrimination or inequality between the parties. This is a constitutional principle." |
https://www.spglobal.com/commodity-insights/en/news-research/latest-news/crude-oil/020425-iraq-moves-to-revive-kurdish-oil-exports-but-challenges-remain A budget amendment passed by Iraqi lawmakers is a step forward in resuming Kurdish crude exports through the Iraq-Turkey pipeline that has been shuttered for over a year, but significant legal and political roadblocks remain.The amendment cemented on Feb. 2 guarantees $16/b will be paid by the federal finance ministry to the Kurdistan Regional Government for oil produced in the northern region.The Association of the Petroleum Industry of Kurdistan (APIKUR), which represents the majority of international oil companies in Kurdistan, said the move was a good first step."APIKUR welcomes the Iraqi Council of Representatives Budget Law amendment, and remains focused on reaching agreements to restore oil exports through the Iraq-Türkiye Pipeline," said Myles B. Caggins III, APIKUR spokesperson, in a statement Feb. 3, received by S&P Global Commodity Insights.Challenges aheadBaghdad has long argued that its state oil marketer SOMO should have exclusive rights to sell Kurdistan's oil, and Iraqi Oil Minister Hayan Abdul Ghani told Iraqi state news agency INA on Feb. 3 that the federal ministry had requested the KRG to transfer the oil to SOMO and that the agreed-upon volumes stand at no less than 300,000 b/d.APIKUR has previously indicated a willingness to sell its crude through SOMO but has said fiscal terms must be left unchanged.Shwan Zulal, managing director at Carduchi Consulting, told Commodity Insights that any negotiations over what level of input Kurdistan will have in the marketing process may be an obstacle in resuming exports through the pipeline that runs to the Turkish port of Ceyhan.However, Ghani said talks are underway with the Turkish government to prepare the Iraq-Turkey Pipeline. Turkey's state energy company Botas said in its monthly energy flow data Feb. 3 that 29,000 barrels were transported via the pipeline.The Turkish ministry did not explain how or why oil was flowing but confirmed it happened and said, "A delegation [from the ministry] was in Baghdad last week, and we are working on reopening the oil line."When Commodity Insights asked the Turkish ministry if the crude in the pipeline was fed in from Turkey's Gabar field, a spokesperson said that an announcement regarding any developments would be made soon.Debts owed, contracts, political will in focusThe oil companies represented by APIKUR will also be looking for guarantees that past debts will be settled. The Kurdish government has racked up extensive debt owed to the international oil companies over the last few years. At the end of 2022, just before the pipeline closed, Norway's DNO was owed $2 million by the KRG, according to the company's annual results from that year.A spokesperson for DNO said while the vote in the Iraqi parliament was a good first step, there are still obstacles to overcome."The company will not resume exports until there is clarity on how it will receive payment for its oil to be delivered to the Iraq-Türkiye Pipeline and for oil that was previously exported in 2022 and 2023 when the pipeline was operational but not fully paid for," the spokesperson said.Ghani said Feb. 2 that there are ongoing negotiations between Baghdad and Erbil regarding the outstanding oil revenue debt.Yet other challenges remain before exports can resume through the pipeline, which historically carried up to 400,000 b/d of medium sour Kurdish crude exports and 75,000 b/d of Kirkuk crude to the Mediterranean market.Pipeline flows have been suspended since March 2023 when a Paris-based arbitration court said Ankara had violated the Iraq-Turkey pipeline agreement by allowing independent Kurdish sales.Determining the transit fee paid to Turkey is one point that must be ironed out, said Zulal.The crux of the debate has long been the type of contract signed. The Kurdish government signed production-sharing contracts with the international oil companies rather than technical service contracts that Baghdad preferred. APIKUR has conceded previously that it is willing to consider modifying existing contracts if an agreement can be made between all parties.Historically, Baghdad had not recognized the production-sharing model, calling them illegal, but in its own most recent licensing round, state firms signed similar contracts with international companies.If Baghdad acknowledges the existing contracts, domestic political issues will likely crop up by Iraqi voting blocs that staunchly oppose any Kurdish autonomy, Zulal said."There are different opinions among the producers, and there could be a very lengthy negotiation once exports start, but there is no solution that fits all," he said.Analysts had previously said there was little political will for Baghdad, which has chronically overproduced on its OPEC+ quota, to reopen the pipeline. But a new deal signed with oil major BP to develop four oil fields in Kirkuk may have shifted the tide."Given the BP deal in the pipeline, Baghdad appears keen to try to restart the pipeline and do a deal to pave the way to future use of the ITP," Zulal said.A welcome first stepEven as there are multiple challenges still to be addressed, Kurdish leaders welcomed the amendment."I hope that this positive step in amending the budget law will be the beginning of resolving all other disputes and the federal government's commitment to provide financial entitlements of the Kurdistan Region," Kurdish Prime Minister Masrour Barzani posted on social media platform X on Feb. 2.Mohammed A. Salih, a non-resident senior fellow at the Philadelphia-based Foreign Policy Research Institute, told Commodity Insights that further progress will be made only if all parties uphold their end of the deal."[Exports will resume] depending on the successful execution of the various steps in this process, provided that Baghdad does not seek to curtail the KRG's financial and economic autonomy through other means, and contingent upon the KRG fulfilling its responsibilities as outlined in the deal," Salih said.He added that the implementation of the budget agreement as it stands, would provide significant relief for Kurdistan, which has been grappling with financial and budgetary crises for the past decade."This could help rebuild -- at least partially -- the trust between the population and the governing parties, which has been severely undermined by the consequences of the KRG's financial instability." |
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