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
  • WEBINAR: Iraq Projects Market 2026

    20 May 2026

    Webinar: Iraq Projects Market 2026 
    Thursday 4 June | 11:00 AM GST  |  Register now

    Agenda:

    • Overview of the Iraq projects market landscape
    • 2025-26 projects market performance
    • Value of work awarded 2026 YTD
    • Assessment of key current and future projects
    • Key drivers, challenges and opportunities
    • Summary of the key clients, contractors and consultants
    • Size of future pipeline by sector and status
    • Ranking of the top contractors and clients
    • Short and long-term market outlook
    • Audience Q&A

    Hosted by: Edward James, head of content and analysis at MEED

    A well-known and respected thought leader in Mena affairs, Edward James has been with MEED for more than 19 years, working as a researcher, consultant and content director. Today, he heads up all content and research produced by the MEED group. His specific areas of expertise are construction, hydrocarbons, power and water, and the petrochemicals market. He is considered one of the world’s foremost experts on the Mena projects market. He is a regular guest commentator on Middle East issues for news channels such as the BBC, CNN and ABC News and is a regular speaker at events in the region. 

    Click here to register

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16925011/main.gif
    Edward James
  • Surbana Jurong to lead Jeddah airport expansion

    20 May 2026

    Register for MEED’s 14-day trial access 

    Singapore-based engineering firm Surbana Jurong is expected to lead the future expansion and development plans of Jeddah Airports Company (Jedco).

    Surbana Jurong's group CEO, Sean Chiao, met with Jedco's CEO, Mazen Bin Mohammed Johar, earlier this week to explore expanded cooperation.

    The meeting focused on leveraging Surbana Jurong’s international expertise in delivering and managing major projects to help King Abdulaziz International airport (KAIA) scale towards more than 90 million passengers annually by 2030.

    Both sides also discussed talent development for Saudi engineers through Surbana Jurong Academy programmes, mentorship and participation in international airport projects, alongside establishing a joint governance framework and progressing towards a memorandum of understanding.

    Surbana Jurong is delivering project management consultancy services for over 100 capital projects at KAIA, valued at SR3bn ($800m).

    These upgrades will boost KAIA’s annual capacity from 29 million to 114 million passengers by 2030, supporting Saudi Arabia’s Vision 2030 and National Aviation Strategy, and enhancing the experience for domestic travellers and millions of Hajj and Umrah pilgrims.

    According to data from regional project tracker MEED Projects, Surbana Jurong is involved in several major projects in the kingdom, including Red Sea Global's Amaala masterplan, the Trojena dams scheme, Oxagon, King Salman International airport and Saudi Arabia Railway's North-South Phosphate Railway 3.

    The firm has also been part of projects in the wider region, including the West Link project, Etihad high-speed rail and Abu Dhabi airport's Midfield Terminal.

    The firm has also secured masterplan project contracts from Abu Dhabi's Department of Municipalities & Transport and Abu Dhabi Ports.

    MEED’s April 2026 report on Saudi Arabia includes:

    > COMMENT: Risk accelerates Saudi spending shift
    > GVT &: ECONOMY: Riyadh navigates a changed landscape
    > BANKING: Testing times for Saudi banks
    > UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
    > DOWNSTREAM: Saudi downstream projects market enters lean period
    > POWER: Wind power gathers pace in Saudi Arabia
    > WATER: Sharakat plan signals next phase of Saudi water expansion
    > CONSTRUCTION: Saudi construction enters a period of strategic readjustment
    > TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure push

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16922013/main.jpg
    Yasir Iqbal
  • Dubai seeks contractors for Metro Gold Line

    20 May 2026

     

    Register for MEED’s 14-day trial access 

    Dubai's Roads & Transport Authority (RTA) has invited contractors to express interest in a contract to build the new Gold Line, as part of its expansion of the Dubai Metro network.

    The notice was issued in mid-May with a submission deadline of 13 June.

    Dubai officially announced the launch of the new Gold Line in April.

    In a post on social media site X, Sheikh Mohammed Bin Rashid Al-Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, said the project will cost about AED34bn ($9.2bn).

    The Gold Line will increase the total length of the Dubai Metro network by 35%.

    The project is scheduled for completion in September 2032.

    The Gold Line will be a fully underground network covering more than 42 kilometres, with 18 stations.

    It will pass through 15 areas in Dubai, benefiting 1.5 million residents.

    The project is expected to provide connectivity to over 55 under-construction real estate development projects.

    The Gold Line will start at Al-Ghubaiba in Bur Dubai and end at Jumeirah Golf Estates.

    It will be connected to Dubai Metro’s existing Red and Green lines and will integrate with the Etihad Rail passenger line.

    The contractor will be responsible for the design and build of all civil works, electromechanical equipment, rolling stock and rail systems.

    The selected contractor will also be required to assist in the systems maintenance and operations during an initial three-year period.

    In October last year, MEED exclusively reported that the RTA had selected US-based engineering firm Aecom to provide consultancy services for the Dubai Metro Gold Line project.

    Stage one covers concept design, stage two covers preliminary design, stage three covers the preparation of tender documents, stage four encompasses construction supervision and stage five covers the defects and liability period.

    MEED’s May 2026 report on the UAE includes:

    > COMMENT: Conflict tests UAE diversification
    > GVT &: ECONOMY: UAE economy absorbs multi-sector shock
    > BANKING: UAE banks ready to weather the storm
    > ATTACKS: UAE counts energy infrastructure costs
    > UPSTREAM: Adnoc builds long-term oil and gas production potential
    > DOWNSTREAM: Adnoc Gas to rally UAE downstream project spending
    > POWER: Large-scale IPPs drive UAE power market
    > WATER: UAE water investment broadens beyond desalination
    > CONSTRUCTION: War casts shadow over UAE construction boom
    > TRANSPORT: UAE rail momentum grows as trade routes face strain

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16919605/main.png
    Yasir Iqbal
  • Iraq oil exports drop by 89% in April

    20 May 2026

    Register for MEED’s 14-day trial access 

    Iraq exported 10 million barrels of crude in April, an 89% drop compared to the 93 million barrels that were exported the month before the Iran conflict, according to the country’s new Oil Minister, Basim Mohammed Khudair.

    Oil exports generated just over $1bn in April, down from $6bn in February, according to a separate statement from the ministry.

    The decline in export volumes and revenues is due to the disruption to shipping through the Strait of Hormuz in the wake of the US and Israel’s war with Iran, which started on 28 February.

    The country is exporting crude by sea through the Strait of Hormuz, as well as from Kirkuk through the Iraq-Turkiye Pipeline (ITP).

    Iraq has plans to increase flows through the ITP to 500,000 barrels a day (b/d), according to Khudair.

    The minister said an increase in crude output from the north of the country depends on the return of global oil companies to the Kurdistan region.

    “The government is treating the energy file in the Kurdistan region as a priority,” he said.

    Many international companies in the Iraqi Kurdistan region suspended their operations in the wake of the US and Isreal attacking Iran on 28 February.

    Khudair said Iraq is currently producing a total of 1.4 million b/d of crude.

    READ THE MAY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the May 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16913742/main.jpg
    Wil Crisp
  • Iraq risks defaulting on payments for $10bn oil project

    20 May 2026

     

    Register for MEED’s 14-day trial access 

    Iraq’s state-owned upstream operator Basra Oil Company (BOC) risks defaulting on payments for the $27bn Gas Growth Integrated Project (GGIP) due to fallout from the US and Israel’s war with Iran.

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

    The consortium formalised the investment agreement with the Iraqi government in September 2021.

    As part of the investment agreement, BOC was expected to make payments to fund the development of the project and the money from these payments was expected to come from oil revenues.

    Due to disruption to the shipping of oil via the Strait of Hormuz in the wake of the US and Israel’s war on Iran, which started on 28 February, BOC’s revenues from oil have declined significantly, impacting the company’s ability to provide funds for the project.

    BOC could default on payments for the project within four to six months if disruption to shipping through the Strait of Hormuz continues, according to industry sources.

    BOC has already informed TotalEnergies and QatarEnergy that it is going though liquidity problems because it is unable to export normal volumes of oil, sources said.

    When contacted about the project’s financial issues, TotalEnergies referred MEED to comments made by the company’s chief executive Patrick Pouyanne on 29 April.

    He said: “We have maintained a team in Iraq, in Basra, of 20 TotalEnergies’ staff, who are supervising the progress of the GGIP projects on the ground, with around 5,000 workers there.”

    He added: “This conflict immediately has some impact on TotalEnergies' operations. And we have been, by the way, very transparent, since day one, to disclose all the impacts on our activities.”

    TotalEnergies declined to answer questions about potential changes to the schedule for the GGIP and whether there are alternative plans in place that provide for a situation where BOC could not deliver agreed funds.

    GGIP masterplan

    The GGIP programme is focused on developing four major projects in Iraq.

    These are:

    • The Common Seawater Supply Project (CSSP)
    • The Ratawi gas processing complex
    • A 1GW solar power project for Iraq’s electricity ministry
    • A field development project at Ratawi, known as the Associated Gas Upstream Project (AGUP)

    The CSSP is designed to support oil production in Iraq’s southern oil and gas fields – mainly Zubair, Rumaila, Majnoon, West Qurna and Ratawi – by delivering treated seawater for injection, a method used to boost crude recovery rates and improve long-term reservoir performance.

    China Petroleum Engineering & Construction Corporation (CPECC) won a $1.61bn contract in May to execute engineering, procurement and construction (EPC) work for the gas processing complex at the Ratawi field development.

    CPECC’s project team based in its Dubai office is performing detailed engineering work on the project.

    In August last year, TotalEnergies awarded China Energy Engineering International Group the EPC contract for the 1GW solar project at the Ratawi field. A month later, QatarEnergy signed an agreement with TotalEnergies to acquire a 50% interest in the project.

    The 1GW Ratawi solar scheme will be developed in phases, with each phase coming online between 2025 and 2027. It will have the capacity to provide electricity to about 350,000 homes in Iraq’s Basra region.

    The project, consisting of 2 million bifacial solar panels mounted on single-axis trackers, will include the design, procurement, construction and commissioning of the photovoltaic power station site and 132kV booster station.

    Separately, in June, TotalEnergies awarded China Petroleum Pipeline Engineering an EPC contract worth $294m to build a pipeline as part of a package known as the Ratawi Gas Midstream Pipeline.

    Also, TotalEnergies awarded UK-based consultant Wood Group a pair of engineering framework agreements in April 2025, worth a combined $11m, under the GGIP scheme.

    The agreements have a three-year term under which Wood will support TotalEnergies in advancing the AGUP.

    One of the aims of the AGUP is to debottleneck and upgrade existing facilities to increase production capacity to 120,000 barrels a day of oil on completion of the first phase, according to a statement by Wood.

    READ THE MAY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the May 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16913732/main.jpg
    Wil Crisp