Iraq’s federal and Kurdish regional governments reached a deal with oil firms to resume crude exports via Turkey on Monday, two oil officials told Reuters.
The breakthrough will allow exports to resume of about 230,000 barrels per day (bpd) from Iraqi Kurdistan which have been suspended since March 2023.
“We will on Tuesday start technical procedures to prepare pipeline operations, with oil flows expected to restart within 48 hours, an oil official with knowledge of the agreement told Reuters.
The deal is subject to Iraqi cabinet approval on Tuesday.
The largest international oil producer active in Kurdistan, Norway’s DNO, and its partner Genel Energy, have not yet agreed to the proposed terms, two sources familiar with the negotiations told Reuters.
One source said DNO wanted to continue negotiations on the repayment of nearly $300 million that the Kurdistan Regional Government (KRG) owed for crude deliveries before the shutdown.
DNO and Genel Energy were not immediately available for comment.
The preliminary plan calls for the KRG to commit to delivering at least 230,000 bpd to Iraqi state oil marketer SOMO, while keeping an additional 50,000 bpd for local use, according to Iraqi officials with knowledge of the agreement.
Under the new deal, an independent trader will handle sales from the Turkish port of Ceyhan using SOMO’s official prices.
For each barrel sold, $16 is to be transferred to an escrow account and distributed proportionally to producers. The remainder of the revenue will go to SOMO, the officials said.
DNO alone produced a gross 78,400 bpd from its Tawke and Peshkabir fields in the first half of this year, selling to the local market.
The draft plan does not specify how or when producers will receive about $1 billion in unpaid arrears, accumulated between September 2022 and March 2023.
One oil company executive said firms expected to be granted a bigger slice of the production proceeds in the future.
The deal reached by an Iraqi oil ministry delegation and the semi-autonomous Kurdish regional government with oil firms comes as OPEC+ oil producing nations add more barrels to the market to gain market share.
The pipeline was shut in March 2023 after the International Chamber of Commerce (ICC) ordered Turkey to pay Iraq $1.5 billion in damages for unauthorised exports by the KRG.
Turkey is appealing that ruling but has said it is ready to restart the pipeline.
Wrangling between the Iraqi federal government, KRG and foreign oil firms over contract terms, arrears and other points of contention have kept that from happening.
The negotiations have also come under pressure from Washington which has urged the parties to reach a deal.
Reuters reported last week that Iraq, OPEC’s second-largest producer, had given preliminary approval to a plan to restart the exports.
(Reporting by Ahmed Rasheed; writing by Muhammad Al Gebaly and Yousef Saba; editing by Jan Harvey and Jason Neely)