(Bloomberg) - Iraqi’s semi-autonomous region of Kurdistan has cut its oil production by half upon request from Baghdad, as the second-largest producer in OPEC tries to meet its output quota.
Kurdistan has been pumping 140,000 bpd since Sept. 2, Kamal Mohammad Salih, the minister of electricity and acting minister of natural resources for the region’s government said in Istanbul on Thursday.
Iraq has exceeded its production limit on a regular basis since agreeing with fellow members of OPEC+ to cut output to prevent an oil surplus. Baghdad has repeatedly pledged to come into compliance, and also promised to make extra curbs to compensate for earlier missed targets, but data compiled by Bloomberg show the country was still pumping too much last month.
Relations between the Kurdistan Regional Government and Iraq’s federal government have been difficult since March 2023, when Turkey halted flows through key oil-transit pipelines after an arbitration court ordered it to pay about $1.5 billion in damages to Iraq for transporting crude without Baghdad’s approval.
The Kurdish region has lost billions of dollars in revenue from the halt, and Iraq itself has lost more than $16 billion, Salih said.
“It is a lose-lose situation, nobody benefits from it,” Salih said.
Salih spoke on the sidelines of an Atlantic Council regional conference on clean and secure energy, before a scheduled meeting with Assistant Secretary of State for Energy Resources Geoffrey Pyatt to ask for help from the U.S. to step up pressure on the central Iraqi government to resolve the conflict.
“It should be opened in any case, but the issue is even more important now,” given tensions in the region and rising oil prices, Salih said.
The Turkish government said in October 2023 that the pipeline could resume operations and has been waiting for Baghdad to resume pumping oil through the conduit. Iraqi Kurdistan had been exporting 400,000 bpd via Turkey before the closure of the pipeline.
“Turkey and the U.S. also share a strong desire to see oil flow again from Iraq through the Iraq-Turkey pipeline,” Pyatt said at the conference. “A message that the U.S. has repeated at the highest levels with our friends in Baghdad, and we will continue to do so.”