The Kurdistan Regional Government (KRG) and the Iraqi government have reached an agreement to hand over the Kurdistan Region’s oil to Baghdad, Channel8 Correspondent reported.

According to the Channel8 Correspondent, all oil production, except that of APIKUR companies, will be transferred to the State Oil Marketing Organization (SOMO), with 50,000 barrels set aside for domestic consumption.

The amount set aside by the KRG will be used for refineries and domestic projects. In addition to this amount and the oil related to APIKUR companies—which remains disputed and is excluded from the agreement—the rest of the Region's total oil production will be handed directly to SOMO.

Baghdad will give up the amount of oil previously exported through Turkey and will have more control over the Region's oil revenues.

Earlier, SOMO announced that it had completed all agreements with companies purchasing oil from the Kurdistan Region and is ready to begin receiving and exporting the Region’s crude to international markets.

Negotiations and Outstanding Issues

The agreement comes after intense negotiations between Erbil and Baghdad, especially recently, and is considered a step forward toward resolving other outstanding issues still under discussion between the two governments, including the financial entitlement of Kurdistan Region public sector employees and revenue sharing.

In an online meeting on Sunday between three Iraqi ministers and a Kurdistan Region delegation, the KRG expressed its readiness to deliver produced oil to SOMO during discussions. The Kurdistan Region delegation also confirmed its willingness to transfer 50% of federal revenues in exchange for the disbursement of salaries for public sector employees.

Oil Production Increase

The Ministry of Natural Resources informed the Iraqi Oil Ministry in a letter that production from the KRG has increased to 270,000 barrels per day. According to the Ministry, the letter outlined several points, including that 40% of the total production—around 110,000 to 120,000 barrels per day—is produced by local companies.