International oil producers operating in Iraq's Kurdistan region have proposed a solution to resume crude exports that have been at a standstill for over seven months. This comes after a payment dispute resulted in the suspension of a crucial pipeline by Turkey, which previously carried approximately 500,000 barrels of oil per day from Iraq's north to global markets.

While Turkey announced last month that the pipeline is ready to resume operations, several outstanding issues must be addressed before crude oil flows can be restored. The central Iraqi government asserts its exclusive right to sell all oil originating from Kurdistan. However, the companies in the Kurdistan region have existing production agreements with the regional administration, having historically sold a significant portion of their supply to them.

In an effort to resolve this impasse, the international firms, which have already incurred over $1 billion in losses due to the interruption, held a meeting with Iraqi officials in Dubai on Wednesday. They offered to sell their oil output directly to SOMO, the state-owned oil marketer, according to a statement released by the Association of the Petroleum Industry of Kurdistan, the group representing these companies. It's important to note that the producers are not planning to increase their oil production for export until these contentious issues are resolved.

The association stated, "The companies will be able to resume full oil production when there is a clear, well-defined, legally binding agreement on oil sales and export terms, including payments for past and future sales."

The question of oil sales rights in the Kurdish region has been a longstanding issue, with the central Iraqi government granting certain semi-autonomous powers to the region. Nevertheless, it has yet to pass a comprehensive law governing the oil industry and regulating sales. Iraq is the second-largest producer in OPEC after Saudi Arabia and primarily sells its oil via the southern port of Basrah.

The consortium of international oil producers involved in this proposal includes DNO ASA, Genel Energy Plc, Gulf Keystone Petroleum Ltd., HKN Energy Ltd., ShaMaran Petroleum Corp., and more recently, Hunt Oil Co.

Bloomberg L.P.