meed-logo

line1 line2 line3
SIGN IN / REGISTER

Iraqi budget may mark new era in Kurdish relations

21 March 2023

 

Talks that took place between Baghdad and Erbil before and after the recent approval of Iraq’s latest budget could form the basis of a new era in relations between the federal government and the Kurdish Regional Government (KRG).

On 13 March, Iraq’s council of ministers agreed on a draft budget for this year of $152.17bn, with 12.6 per cent of the budget going to the country’s northern semi-autonomous Kurdish region.

For the first time, a multi-year draft budget was agreed upon, covering 2023, 2024 and 2025.

The multi-year agreement has given the country a sense of increased financial certainty after a failure to pass budgets in 2021 and 2022.

The budget announcements were made after a series of high-level meetings between officials from federal Iraq and the KRG.

During a press conference announcing the budget deal, Iraqi Prime Minister Mohammed Shia’ al-Sudani said that an "all-encompassing" agreement has been reached between Baghdad and Erbil.

Areas of contention

While significant progress has been made in talks between Baghdad and Erbil, details around the delivery of the budget funds and the legality of Iraqi Kurdistan’s oil and gas law remain contentious.

The day after the budget approval was announced, Al-Sudani travelled to Erbil for his first official visit to the region since taking office, highlighting the importance of these issues.

After a meeting between Al-Sudani and the Kurdistan Region Prime Minister Masrour Barzani, Al-Sudani’s office issued a statement that said: “The prime minister affirmed that the government possesses the will and serious desire to end these outstanding issues in a radical manner and move to a broad horizon of joint action and economic opportunities, which will benefit our people in Kurdistan and all other provinces.”

Barzani also released a statement saying: “The federal budget bill and progress on oil and gas give us stakes in our finances and lay foundations for deeper ties. Let us build on them.”

While the tone of Barzani’s statement was positive and highlighted progress that has been made in the negotiations, it also underlined the fact that more negotiations are required to reach an agreement in certain areas.

Among the main issues between Erbil and Baghdad is the implementation of Article 140 of the Iraqi constitution.

This article calls for a referendum to be held to decide whether the disputed regions of Kirkuk, Diyala, Nineveh and Salahaddin ought to fall under the authority of the KRG or Baghdad.

It was originally scheduled for 15 November 2007 but has yet to take place.

Kurdish resentment over the government's failure to implement Article 140 was one of the issues that led to the 2017 Kurdistan Region independence referendum.

This referendum posed the question: "Do you want the Kurdistan Region and the Kurdistani areas outside the region to become an independent state?"

This referendum led to clashes between military groups controlled by Baghdad and Erbil and ultimately led to the federal government taking control of Kirkuk.

Speaking to the Kurdish media outlet Rudaw after the meeting with Barzani, Al-Sudani said: “Definitely, the issue of Article 140 is a part of the political agreement and a budget has been assigned for this purpose.”

Deep-rooted challenges

Arabisation policies that were implemented by former Iraqi leader Saddam Hussein in disputed regions like Kirkuk meant that devising a referendum that is perceived by both sides as fair is a complex task.

While the agreement on 12.6 per cent of the country’s budget being delivered to the Kurdish region sounds conclusive, in the past similar agreements have been a long-running source of conflict – with both sides accusing the other of reneging on the agreement terms.

In November 2014, Baghdad and Erbil reached a deal under which the KRG committed to exporting oil through Iraq’s State Oil Marketing Organisation in exchange for a 17 per cent share of the national budget.

In the wake of the deal, Baghdad accused Erbil of failing to provide the promised oil and the KRG accused Baghdad of withholding payments.

Problems with budget payments to Iraqi Kurdistan made headlines as recently as January this year when Iraq's Federal Supreme Court (FSC) ruled that recent federal budget transfers to the region were illegal.

The decision invalidated several orders from the government to authorise payments to the KRG. It is unclear how the FSC’s ruling will impact future budget payments to the regional government.

On 16 March, it was announced that oil revenues from the Kurdistan Region will be transferred to a bank account under federal government supervision for the first time since 2002.

While significant progress has been made between the KRG and Iraq’s federal government, there is still a wide range of emotive, unresolved issues.

Experience has shown that agreements between Erbil and Baghdad can quickly unravel and negotiators will have to tread carefully to continue making progress.

If compromises are made and common ground is found, increased political stability may also lead to better security and increased foreign investment that could benefit the whole country.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10689586/main3259.jpg
Wil Crisp

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Iraq boosts oil exports after talks with Iran

    7 September 2026

    Iraq has boosted its oil export capacity to more than 3 million barrels a day (b/d) after holding talks with Iran, according to Oil Minister Basim Mohammed Khudair.

    In a video statement released on 5 September, he said the country has been able to ship more than 3 million b/d since the start of this month.

    He also said: “The government plans to raise export capacity to 5 million b/d after completing the strategic pipelines extending towards Fishakhpur and Banias, as well as the export outlets in the Strait of Hormuz.”

    Iraq’s oil exports rose to around 2.34 million b/d in August, according ⁠to ⁠officials.

    The increase came after Iran granted special permission for a number of Iraqi oil tankers to pass through the Strait of Hormuz in August, following repeated requests from Baghdad.

    On 22 August, Iraqi President Nizar Amidi said Iran had facilitated the passage of “some ships carrying Iraqi oil in the strait” in recent days, and Baghdad had discussed exporting Iraqi oil through Hormuz with Iranian officials.

    The details of Iraq’s agreement have not been released by officials, but Amidi said that his government “will not accept Iraqi territory being used to launch attacks against any other country”.

    The Iraqi president said attacks launched from inside Iraq against countries in the region “have no justification”.

    Prior to the deal being announced, Iraqi exports had been dramatically reduced amid fallout from the regional war that started when the US and Israel attacked Iran on 28 February 2026.

    The regional war has led to significant disruption to shipping through the Strait of Hormuz, which is a key export route for Iraqi oil.

    Iraq’s crude exports fell from more than 3.3 million b/d before the war to a low of about 330,000 b/d in April, while exports from its southern terminals were temporarily halted altogether in March.

    Tensions still remain high in the region, and some shipping is still being disrupted by the ongoing conflict.

    On 2 September, Saudi Arabia condemned an Iranian attack on an oil tanker owned by its national shipping company that resulted in the deaths of two citizens of the Philippines.

    In a statement, Saudi Arabia’s Foreign Ministry said Iran targeted the Sidr tanker, owned by national carrier Bahri, while it was transiting the Strait of Hormuz two days earlier.

    It said: “The kingdom stressed the necessity of halting escalations and respecting international maritime safety and the security of global energy supplies.”

    Kuwait and Qatar’s foreign ministries said the attack violated international law and freedom of maritime navigation.

    Qatar called the attack a “flagrant violation of the rules of international law and freedom of maritime navigation”. Doha further rejected the use of the Strait of Hormuz as a “bargaining chip”.

    Iran has repeatedly attacked and threatened tankers attempting to sail through the strategic waterway without authorisation, impeding energy exports from neighbouring oil-rich Gulf countries.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19424826/main.jpg
    Wil Crisp
  • Customs clearance delays Iraqi oil field development

    7 September 2026

     

    Problems getting critical equipment through customs are delaying a key part of Iraq’s $27bn Gas Growth Integrated Project (GGIP), according to industry sources.

    Phase one of the GGIP is expected to be worth about $10bn. France’s TotalEnergies holds a 45% stake in the project, while Iraq’s Basra Oil Company (BOC) and QatarEnergy hold 30% and 25% respectively.

    The specific part of the project that is being delayed by customs issues is known as Ratawi phase 1.

    It is focused on developing Iraq’s Ratawi oil and gas field as part of the wider GGIP.

    Previously, this project was expected to come online before the end of June this year.

    Speaking on 23 July 2026, TotalEnergies CEO Patrick Pouyanne said that Ratawi phase 1 was being delayed due to issues related to the conflict with Iran, but he still expected it to start up before the end of September 2026.

    Although recent complications are expected to delay the project further, it is on track to come online in mid-to-late October at the earliest, according to industry sources.

    One source said: “Right now, the main issue causing delays to the project isn’t the crisis in the Strait of Hormuz; it’s Iraqi customs clearance.

    “TotalEnergies is having trouble getting critical equipment released.”

    TotalEnergies did not respond to a request to comment on the progress of Ratawi phase 1.

    In November last year, the French company said that phase 1 aimed to increase production to 120,000 barrels a day (b/d).

    At the time, it also said that it was expected to come on stream “by early 2026”.

    It also said that the launch of phase 2 of the project, which would be considered “full field development”, would enable the company to increase production to 210,000 b/d starting in 2028.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19424624/main.png
    Wil Crisp
  • Firms prepare bids for NWC sewage treatment package 14

    4 September 2026

     

    At least three contractors are preparing to make offers for package 14 of Saudi Arabia’s long-term operations and maintenance (LTOM) sewage treatment programme, according to sources.

    Known as Eastern A Cluster (LTOM14), the package was tendered by the state-owned National Water Company (NWC) in April, with a bid submission deadline of 30 September.

    The contract covers the upgrade of six existing sewage treatment plants (STPs), with a capacity expansion of 30,000 cubic metres a day (cm/d) at the Al-Jarodia STP.

    This will increase total treatment capacity from about 263,000 cm/d to approximately 293,000 cm/d, with an estimated cost of $180m.

    According to sources, the firms preparing to submit bids include:

    • Alkhorayef Water & Power Technologies (Saudi Arabia)
    • Civil Works Company (Saudi Arabia)
    • Miahona (Saudi Arabia)

    The latest phase follows the formal signing of a $347m contract between NWC and a Saudi-Chinese consortium for Northern Cluster Sewage Treatment Plants Package 10 (LTOM10) on 2 September.

    The same consortium led by United Water (China) is not planning to bid for LTOM14 and is expected to formally sign a contract for LTOM11 in the coming months, a source said.

    In April, MEED exclusively reported that the group had won the contract for package 11, which will have a combined capacity of about 440,000 cm/d.

    It is also understood that Beijing Enterprises, a bidder for North Western B Cluster (LTOM12), is not preparing to bid for package 14.

    In the meantime, the contract for LTOM12 is moving towards award, with bids currently under evaluation.

    The contract covers the construction and upgrade of seven STPs with a combined capacity of about 162,000 cm/d. As previously reported, NWC opened financial bids for the project in April.

    US/India-based Synergy Consulting is Financial Advisor to NWC for the full LTOM programme.

    Future phases

    In total, the LTOM programme comprises 19 packages split into two phases. In May 2024, NWC announced it had awarded $2.5bn-worth of contracts in the first phase. Phase two of the programme includes 10 packages covering 117 treatment plants.

    In April, MEED exclusively reported that NWC had held several discussions regarding changes in scope details and potential expansions to upcoming projects. This involved “grouping some upcoming projects”.

    The request for proposals for LTOM13 was subsequently put on hold and it is now understood that this tender has likely been merged with other packages in the programme.

    According to a source, Eastern B Cluster (LTOM15) has also been cancelled and has likely been merged. LTOM15 had comprised two STPs with a total capacity of 152,000 cm/d.

    The next contract to be tendered will be Central Cluster (LTOM16), potentially in November, a source added.

    Under the original scope, LTOM16 covers the construction of 14 STPs with a total capacity of 153,000 cm/d.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19358188/main.jpg
    Mark Dowdall
  • Egyptian contractor wins Abu Dhabi Ramhan Island deal

    4 September 2026

    Egypt-headquartered contractor Rowad Modern Engineering has been awarded the main works contract for the Marina Apartments project on Ramhan Island, Abu Dhabi.

    The contract was awarded by the local firm Eagle Hills, which is led by Mohamed Alabbar, the founder and chairman of Emaar Properties.

    Rowad’s scope includes structural and architectural works, finishing, and mechanical, electrical and plumbing systems.

    The company will also deliver infrastructure works, including utility connections to external networks, testing and commissioning.

    The development comprises two residential towers offering 187 residential units.

    The works will be carried out under the consultancy supervision of local engineering firm Mirage Leisure & Development.

    The latest contract award follows Eagle Hills awarding the local firm Arabian Construction Company (ACC) an estimated AED2.5bn ($680m) construction contract to build about 500 villas at the Ramhan Island development, as reported by MEED previously.

    Located off the coast of Abu Dhabi, the Ramhan Island development spans an area of over 4 million square metres.

    The overall development includes the construction of 1,800 villas, 900 residences, a hotel and retail facilities.

    Mohamed Alabbar launched the Ramhan Island development in May 2024.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19355437/main.jpg
    Yasir Iqbal
  • Dubai sets deadline for Jebel Ali waste-to-energy PPP

    4 September 2026

     

    Register for MEED’s 14-day trial access 

    Dubai Municipality has set a 27 September deadline for developers to submit expressions of interest (EOIs) for its planned Jebel Ali waste-to-energy (WTE) public-private partnership (PPP), according to a source.

    The greenfield facility is planned to treat up to 6,000 tonnes of municipal solid waste a day.

    The municipality is seeking international and local developers to develop, finance and operate the facility. It is planning to prequalify developers later this year before issuing a request for proposals (RFP) in the first quarter of next year, a source said.

    The Jebel Ali facility is intended to support Dubai’s waste-management strategy and its target of reducing reliance on landfill.

    Dubai Municipality is being advised by a team led by Abu Dhabi’s Tribe Infrastructure Group, with UK-headquartered Ashurst and Germany’s Fichtner also involved.

    It was confirmed to MEED that the project is separate from the planned second phase of the Warsan WTE facility, for which Dubai Municipality issued a consultancy tender in February.

    That facility will be located in Warsan 2, next to the Al-Aweer sewage treatment plant. The expansion is expected to increase waste-conversion capacity at the existing Warsan site with an estimated budget of $500m. The consultancy contract has a duration of six years.

    The original Warsan WTE plant, Dubai’s first major WTE public-private partnership (PPP) project, reached full commercial operations in 2024.

    Located in the Warsan area, the AED4bn ($1.1bn) facility treats 1.9 million tonnes of municipal solid waste annually, generating up to 220MW of thermal energy that is fed into the local grid.

    In February 2023, state utility Dubai Electricity & Water Authority (Dewa) and Dubai Waste Management Company signed the power-purchase agreement (PPA) for the project.

    Dubai Waste Management Company, the special-purpose vehicle implementing the scheme, reached financial close in June 2021 for the project.

    The Warsan project was developed under a 35-year PPP concession by a consortium comprising Dubai Holding, Dubai Aluminium, Tech Group and Itochu Corporation. 

    The main contractor was a joint venture of Belgium’s Besix Group and Hitachi Zosen Inova of Switzerland.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19354502/main.jpg
    Mark Dowdall