In a new proposal submitted by the Iraqi government, Baghdad seeks to establish a new oil company that will be managed jointly with Erbil. This company will be tasked to handle the crude oil production and exports from the semi-autonomous region of Kurdistan.
Kurdistan is home to the most prolific fields located in northern Iraq and the proposal has been part of an ongoing talks between the central Iraqi government and the Kurdish government which aims to mend bilateral relations after an independence referendum for the region failed some few years ago.
As per Ihsan Abdul Jabbar, oil minister of Iraq, a positive understanding has been reached between the two governments with regards to the production and export of oil from Kurdistan. He added that the ongoing talks show new visions and ideas for the region.
An Oil Ministry official commented that though progress has been made with regards to the talks more time will be needed to reach a final agreement.
Iraq is the second largest producer of crude oil and because of this has been required by OPEC+ to cut down on one of its largest national oil outputs, a deal reached with OPEC+ in April. A considerable amount of its output comes from the Kurdistan region which as of April, exported about 500,000 barrels per day of crude oil. Half of it will go to Iraq's state oil marketing company, SOMO, under an agreement between the central government and government of Kurdistan.
The semi-autonomous Kurdistan region continues to export oil without consulting the federal government and just last month Iraq needed to call the attention of Erbil of its part in meeting the production cuts enforced by the OPEC+ body when once again it fell short of its target due to the latter's overproduction.