Iraqi lawmaker Shwan Mohammed announced on Saturday that a comprehensive agreement between the federal government in Baghdad and the Kurdistan Regional Government (KRG) is nearing completion, a deal expected to restart the Kurdistan Region’s oil exports through Iraq’s State Organization for Marketing of Oil (SOMO) and address the ongoing public salary crisis.

In a statement to local media, Mohammed revealed that under the proposed agreement, the KRG’s oil will be exported via SOMO, with the Iraqi Federal Ministry of Finance taking responsibility for direct payments to operating oil companies. The deal includes safeguards to prevent political or administrative disruptions, ensuring smooth implementation.

“This agreement will directly contribute to resolving the salary issue and lay the groundwork for settling broader financial disputes between Erbil and Baghdad,” Mohammed said.

The announcement comes as Iraq prepares for elections, with political parties seeking to ease tensions and bolster economic stability amid declining oil revenues and international pressure for transparent resource management. Meanwhile, Kurdish leaders have intensified calls to end what they describe as Baghdad’s “collective punishment” through delayed salary payments.

Oil exports from the Kurdistan Region were suspended on March 25, 2023, following an International Chamber of Commerce (ICC) arbitration ruling that found Turkey in breach of a 1973 pipeline agreement by allowing independent KRG oil sales. As a result, Ankara halted crude flows through the Kirkuk-Ceyhan pipeline, cutting off the KRG’s primary revenue source.

Before the stoppage, the Kurdistan Region exported approximately 450,000 barrels of oil per day, generating vital income for public sector salaries and services. The suspension has reportedly cost the KRG and Iraq’s federal budget over $25 billion in lost revenue.

Despite a tentative April 2023 agreement to resume exports under federal oversight, disputes over legal and technical terms have stalled progress. The prolonged shutdown has crippled the KRG’s finances, forcing reliance on limited local revenues and worsening salary delays for government employees.

In recent months, Baghdad and Erbil have held negotiations to resolve financial and oil-sharing disputes, including discussions on budget allocations and revenue distribution. The new SOMO-mediated agreement is seen as a critical step toward restoring stability and improving federal-KRG relations.