ERBIL, Kurdistan Region - The Iraqi oil ministry said on Sunday it is prepared to export up to 300,000 barrels of oil per day through the Kurdistan Region’s pipeline to Turkey if Erbil allows Baghdad to use the route. A Kurdish official said they are ready to export the oil if Baghdad lifts dollar embargo on the Region.
The ministry said in a statement that it has expressed to Kurdish authorities “its readiness to resume exports in quantities not exceeding 300,000 barrels through the export pipeline inside the Kurdistan Region toward the port of Ceyhan.”
It added that this would be in addition to the export of around 200,000 barrels produced in the Kurdistan Region - which has been suspended due to ongoing drone and missile attacks on its energy infrastructure by Iraq’s pro-Iran militia groups in support of Tehran’s war with Washington and Tel Aviv.
“The Ministry of Natural Resources has confirmed its rejection of resuming exports at this time and has set several conditions that are unrelated to the issue of crude oil exports,” said the federal ministry, adding that they have told the Kurdish authorities that such conditions can be discussed later “in parallel with the resumption of oil exports.”
Iraqi oil minister Hayan Abdul-Ghani told Rudaw in a statement that the request aims to provide "modest financial revenues to compensate for part of what was lost in resources due to the halt of exports from southern ports."
“The Region's authorities have not approved so far,” he added.
Iraq’s oil exports have largely been halted since Iran recently effectively closed the strategic Strait of Hormuz as part of its war with the US and Israel. Around 20 percent of the world’s oil supply passes through this chokepoint, including oil exported from Iraq. Baghdad is scrambling to find alternative ways to export its crude - which accounts for around 90 percent of the country’s revenues.
“We renew our request to the Ministry of Natural Resources to resume exports immediately, based on the supreme national interest and in accordance with the constitution and the federal budget law,” the Iraqi oil ministry said.
In response to the statement, a senior Kurdistan Regional Government (KRG) official, who spoke on the condition of anonymity, told Rudaw English that Erbil does want the Iraqi oil to flow to Turkey “especially when it serves as the only stable route to market under the current conditions. But it is unreasonable to continue to economically strangle the Kurdistan Region by imposing a dollar embargo on our trade. We have one ask: end the embargo and allow imports.”
Baghdad's new ASYCUDA digital customs system - which was implemented across the country, except for the Kurdistan Region on January 1 - prevents Kurdish traders from accessing official-rate US dollars unless they pay federal taxes in advance through a platform not yet fully integrated with the KRG’s system. This has created what KRG sources have described as a “dollar embargo,” forcing the Region to rely on black-market currency that is more expensive than the central bank rate.
Under an established arrangement, the KRG collects customs duties, remits part of the revenue to Baghdad, and uses the remainder as a primary funding source for the regional government.
The KRG has not rejected the ASYCUDA system but does not want Baghdad to have full control over revenues from the border crossings.
Mudher Mohammed Salih, the financial adviser to the Iraqi prime minister, told Rudaw on Saturday that the impact of the suspension of oil exports through the Strait of Hormuz has not yet appeared, but it is expected to be felt after two months. He added that the government may resort to domestic borrowing to secure salaries, noting that Iraq is financially protected for about five months.