At a Glance

• Production falls to 250,000 barrels daily
• Output down 74% since 2017
• Ceyhan pipeline closure worsened the decline
• Unpaid dues deter new investment

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Oil production in the Kurdistan Region has fallen sharply over the past decade, with declining field output, export disruptions, and financial challenges putting growing pressure on the sector.

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Key Statements and Focus Area

• Production decline: Oil production in the Kurdistan Region has declined by 74% over a 10-year period. Regional output fell from around 950,000 barrels per day in 2017 to 250,000 barrels per day in 2026. When only fields within the Kurdistan Region are considered, excluding Kirkuk, production declined from approximately 570,000 barrels per day to 250,000.
• Taq Taq field: has seen output fall from approximately 120,000 barrels per day to less than 5,000 barrels. Rapid and improper extraction contributed to the field’s decline, with water and gas mixing with crude oil and reducing production capacity.

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The suspension of oil exports through the Ceyhan pipeline since March 2023 has been a major factor affecting the sector. With exports halted, oil companies have been producing primarily for local consumption, limiting their access to international markets and reducing potential revenues. Foreign oil companies have largely stopped drilling new wells amid unpaid financial dues and declining field productivity.

The combination of exhausted fields, limited export opportunities, and low local selling prices has reduced the incentive to invest in new production capacity.

Oil produced in the Kurdistan Region is currently being sold domestically at prices ranging from approximately $30 to $40 per barrel. The decline has also prompted criticism of the Ministry of Natural Resources over its oversight of oil companies and the management of production.

Critics argue that insufficient monitoring allowed some fields to be developed through extraction methods that damaged their long-term productivity. Several fields now require additional investment and a period of recovery, but financial difficulties and unresolved legal issues continue to constrain development.

The sustained decline in production poses broader risks to the Kurdistan Region’s economy, which relies heavily on oil revenues. Without new investment, additional drilling, and improved management of existing fields, declining output could further limit the sector’s ability to generate revenue and support the region’s economy.

FYI

The Kurdistan Region’s oil sector was developed largely through production-sharing contracts with international companies, allowing foreign operators to invest in exploration and production in return for agreed shares of revenues. This model helped expand production rapidly during the 2010s but also became central to disputes over payments, contracts, and the relationship between Erbil and Baghdad.

The resumption of exports through the Iraq-Türkiye pipeline has remained an important issue for the sector because international sales generally provide producers with access to larger markets than domestic sales. The long-running export disruption has therefore affected both production incentives and the financial position of oil companies operating in the region.

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