popular articles

Baghdad and Erbil: the oil agreement in the background of a budget debate

Negotiations between the Kurdistan Regional Government and Baghdad officially focus on salary payments. Meanwhile, the Iraq-BP agreement to increase production in Kirkuk fuels speculation about a possible resumption of oil exports.

Please share:

Talks between the Kurdistan Regional Government (KRG) and Iraq’s Ministry of Finance center on the remuneration of Kurdish civil servants. This long-awaited negotiation aims to resolve a budget crisis aggravated by the shutdown of the Kirkuk-Ceyhan pipeline. Kurdish authorities fear another delay in salary payments, which could stir internal tensions. Several observers believe the outcome of this matter could influence how oil revenues are managed, although no official statement has gone beyond this strictly budgetary scope for now.

A confirmed agreement between Iraq and British Petroleum

The only recent certainty in the energy landscape concerns the deal reached between Iraq and British Petroleum (BP). On January 15, 2025, both parties signed a memorandum of understanding in London to increase production at four oil fields in the Kirkuk region. The goal is to boost the current output from 350,000 barrels per day to between 450,000 and 500,000 barrels per day. This agreement also includes utilizing associated gas to reduce flaring and improve the country’s electrical production. Local engineers see considerable potential for expansion, provided that sufficient funding is secured and territorial disputes are avoided.

However, some Kurdish officials are concerned by this initiative, pointing out that these fields are partially located in disputed areas. The KRG insists on being included in any project involving Kirkuk, in order to protect its constitutional rights and ensure a fair distribution of resources. So far, the agreement remains exclusively between Baghdad and BP, with no formal mention of the Kurdistan region. Several analysts suggest the issue could resurface when overall management of Iraq’s oil is discussed, but no authority has confirmed that Kirkuk will be on the agenda of the current meeting.

Speculation around the Kirkuk-Ceyhan pipeline

Since it was shut down, the Kirkuk-Ceyhan pipeline has hindered the Kurdistan region’s economy, which relies heavily on oil export revenues. The arbitration dispute that pitted Iraq against Turkey has complicated the situation further, challenging the legality of some KRG-origin shipments. Kurdish representatives are counting on a swift resumption of transit, but that depends on a political and financial agreement also involving Turkish authorities. In this context, the prospect of renewed oil revenues through the BP deal is generating significant interest, though there is no indication this topic will be addressed in the ongoing talks.

Some experts propose that a tripartite agreement involving the KRG, Baghdad, and BP could facilitate the pipeline’s reopening. This scenario remains purely speculative, as it would require a common willingness to resolve disputes and clarify each party’s role. Proponents argue that the presence of a major international company would bring stability and transparency. To date, however, no government body has publicly supported such a plan, and the current discussions remain primarily focused on salaries.

Rehabilitating the fields and potential tensions

BP’s rehabilitation project aims to optimize four major oil fields, including Kirkuk, by increasing production capacity, upgrading infrastructure, and harnessing associated gas to reduce energy waste. From the Iraqi perspective, this modernization represents a key step toward a more profitable operation, even though environmental concerns are not at the forefront. Planned investments largely depend on how the initial phase unfolds and on the stability of the regulatory framework.

Kurdish officials maintain that no decision regarding Kirkuk should be made without their input. They emphasize the need for clear protocols to govern production and revenue sharing in order to avoid legal uncertainty. Given the financial importance of oil revenues, which are vital for the Kurdistan region’s budgets, local leaders worry that an exclusive arrangement between Baghdad and an international entity could undermine their influence over energy policy.

Register free of charge for uninterrupted access.

Publicite

Recently published in

The global oil industry prepares for further disruptions as oil prices fall below USD 60 per barrel, a level unseen since 2021. The decline in investments, particularly in the US shale sector, raises concerns.
US crude inventories increased by 200,000 barrels last week, far below analysts' forecasts. However, oil prices remain under pressure following the announcement of a potential rise in production by OPEC+.
US crude inventories increased by 200,000 barrels last week, far below analysts' forecasts. However, oil prices remain under pressure following the announcement of a potential rise in production by OPEC+.
Thousands of miners blocked the streets of La Paz on April 23, 2025, to protest the shortage of dollars and fuel, which is particularly affecting Bolivia's mining sector.
Thousands of miners blocked the streets of La Paz on April 23, 2025, to protest the shortage of dollars and fuel, which is particularly affecting Bolivia's mining sector.
OPEC Secretary General Haitham Al Ghais emphasizes the need to reconcile energy security with emission reduction goals, in light of the International Energy Agency's (IEA) approach.
OPEC Secretary General Haitham Al Ghais emphasizes the need to reconcile energy security with emission reduction goals, in light of the International Energy Agency's (IEA) approach.
The DBM-1 ST2 appraisal well confirms a significant oil discovery offshore Gabon. The Bourdon project could add up to 25 million recoverable barrels to BW Energy's reserves, further strengthening the Dussafu licence development.
Woodside Energy recorded stable production and revenues of 3,315 million USD in Q1 2025, with a notable increase in production at Sangomar, but a slight decline due to weather impacts at other sites.
Woodside Energy recorded stable production and revenues of 3,315 million USD in Q1 2025, with a notable increase in production at Sangomar, but a slight decline due to weather impacts at other sites.
Canadian company TAG Oil has completed the sale of its interests in five production permits in New Zealand to Kiwi Royalty Limited, for a total consideration of up to USD 2.5 mn.
Canadian company TAG Oil has completed the sale of its interests in five production permits in New Zealand to Kiwi Royalty Limited, for a total consideration of up to USD 2.5 mn.
The Egyptian government is launching a 75-well drilling campaign in the Eastern Desert, aiming for a 9% increase in crude output in fiscal year 2024/2025.
The Egyptian government is launching a 75-well drilling campaign in the Eastern Desert, aiming for a 9% increase in crude output in fiscal year 2024/2025.
Reconnaissance Energy Africa has signed a memorandum of understanding with ANPG to explore 5.2 mn onshore acres in Angola, expanding its operations into the Damara Fold Belt and Rift Basin.
The IMF forecasts robust economic growth for Libya in 2025 driven by oil, but warns that structural reforms are essential to avoid renewed vulnerability to global market shocks.
The IMF forecasts robust economic growth for Libya in 2025 driven by oil, but warns that structural reforms are essential to avoid renewed vulnerability to global market shocks.
The United States has sanctioned Shandong Shengxing Chemical Co., accused of purchasing Iranian oil. This move is part of the "maximum pressure" strategy against Iran, aimed at limiting its oil exports.
The United States has sanctioned Shandong Shengxing Chemical Co., accused of purchasing Iranian oil. This move is part of the "maximum pressure" strategy against Iran, aimed at limiting its oil exports.
Rönesans Holding announces a major $2 billion investment to build a polypropylene (PP) production plant in Ceyhan, Turkey, in partnership with SONATRACH and Stolt-Nielsen. This project is expected to strengthen the country’s industrial self-sufficiency.
Rönesans Holding announces a major $2 billion investment to build a polypropylene (PP) production plant in Ceyhan, Turkey, in partnership with SONATRACH and Stolt-Nielsen. This project is expected to strengthen the country’s industrial self-sufficiency.
Libya begins an international promotional tour to present 22 oil blocks, aiming to revive a strategic sector affected by years of instability.
Tullow Oil sold its stakes in the Lokichar Basin to Gulf Energy while retaining a future entry right, marking a new step in its debt reduction strategy in Kenya.
Tullow Oil sold its stakes in the Lokichar Basin to Gulf Energy while retaining a future entry right, marking a new step in its debt reduction strategy in Kenya.
US crude reserves rose by only 500,000 barrels, falling short of forecasts, while exports reached their highest level in a year.
US crude reserves rose by only 500,000 barrels, falling short of forecasts, while exports reached their highest level in a year.
Amplify Energy has amended the terms of its merger with Juniper Capital, which will inject an additional $10 mn in cash to strengthen the combined entity's financial position amid oil price volatility.
Amplify Energy has amended the terms of its merger with Juniper Capital, which will inject an additional $10 mn in cash to strengthen the combined entity's financial position amid oil price volatility.
The International Energy Agency anticipates weaker oil demand growth in 2025, driven by US tariff tensions disrupting market stability and weighing on the shale oil sector.
British group BP has announced a new oil discovery in the deep waters of the Gulf of Mexico, strengthening its investment strategy in hydrocarbons with the aim of increasing production by 2030.
British group BP has announced a new oil discovery in the deep waters of the Gulf of Mexico, strengthening its investment strategy in hydrocarbons with the aim of increasing production by 2030.
International Petroleum Corporation repurchased 277,060 common shares between 7 and 11 April under its ongoing share buyback programme, using the Toronto and Stockholm exchanges.
International Petroleum Corporation repurchased 277,060 common shares between 7 and 11 April under its ongoing share buyback programme, using the Toronto and Stockholm exchanges.
CNOOC Limited has begun production at the offshore Wenchang 9-7 oilfield, located in the western Pearl River Mouth Basin, targeting 12,000 barrels of oil equivalent per day by 2027.
CNOOC Limited has begun production at the offshore Wenchang 9-7 oilfield, located in the western Pearl River Mouth Basin, targeting 12,000 barrels of oil equivalent per day by 2027.
Petro-Victory Energy secures key assets in Brazil through strategic alliances and acquisitions, consolidating its onshore market position and initiating a new phase of development.
Trio Petroleum Corporation has completed the acquisition of producing oil assets from Novacor Exploration in the prolific Lloydminster region of Canada, consolidating its strategic presence in North America's heavy oil sector.
Trio Petroleum Corporation has completed the acquisition of producing oil assets from Novacor Exploration in the prolific Lloydminster region of Canada, consolidating its strategic presence in North America's heavy oil sector.
Road fuel volumes declined while jet fuel and non-road diesel increased, according to March 2025 data from the Comité Professionnel du Pétrole.
Road fuel volumes declined while jet fuel and non-road diesel increased, according to March 2025 data from the Comité Professionnel du Pétrole.
Chevron returned several crude shipments to Venezuela after failing to sell them due to US-imposed financial sanctions, despite holding a temporary authorisation to operate until the end of May.
Chevron returned several crude shipments to Venezuela after failing to sell them due to US-imposed financial sanctions, despite holding a temporary authorisation to operate until the end of May.

Advertising