Officials say that a long-running dispute between two sides has been temporarily settled, and that oil exports through Turkey will start up again.

Iraq's central government has made a deal with the semi-autonomous Kurdish region to start sending oil from northern Iraq through a pipeline to Turkey again.

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At a press conference in Baghdad on Tuesday, Iraqi Prime Minister Mohammed Shia al-Sudani and Masrour Barzani, Prime Minister of the Kurdistan Regional Government, announced the deal.

"Stopping the export of the region's oil hurts Iraq's income," Sudani said. He added that the governments would work on passing a federal law that would spell out how the money from oil and gas exports would be split.

Barzani said in a statement that even though the deal is only temporary, it is a "crucial step toward ending the long-standing dispute" between Erbil and Baghdad and "creates a positive and safe environment to finally approve the national oil and gas law."

A KRG government official said that the agreement would be put into place "today."

Last month, Iraq stopped sending almost 500,000 barrels of oil through the pipeline because the International Chamber of Commerce sided with Iraq in a long-running dispute over the KRG's ability to export oil on its own.

The arbitration ruling said that Turkey had broken agreements when it bought oil directly from the KRG, so it should pay Baghdad $1.4 billion.

Baghdad and Erbil have been at loggerheads over oil revenues for years.

Iraq is the second-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC). In 2014, after the KRG put Iraq's State Oil Marketing Organization (SOMO) out of business and started exporting crude oil through Turkey, Iraq filed for arbitration against Turkey. Iraq said that a deal it made with Turkey in 1973 said that all oil exports had to go through SOMO, which was owned by the state.

Mahmoud Abdelwahed of Al Jazeera reported from Baghdad that the Iraqi prime minister said the deal was made to calm things down between the two sides.

"It also wants to avoid a budget deficit," Sudani said, adding that the deal would save the country about 400,000 barrels of exports per day.

Oil-reliant economy

The deal made on Tuesday will let SOMO and the KRG work together to market the crude oil, according to a Kurdish official who spoke to the Associated Press on the condition of anonymity because he was not allowed to talk about the matter in public.

The official was quoted as saying that the KRG will have full control over oil money, but it will be put in an account that the federal government can check.

The World Bank says that Iraq has one of the most oil-dependent economies in the world. Even though most of Iraq's oil reserves are in the south, the Kurdish region in the north is very dependent on oil exports from its fields.

Since exports through a pipeline to the Turkish port of Ceyhan on the Mediterranean Sea were stopped, there was nowhere for foreign oil companies to pump oil from northern Iraq.

Norway's DNO, one of the biggest companies working in areas run by the KRG, said it would stop making oil from its wells.

Before Ankara did what it did on March 25, the semi-autonomous region was sending about 450,000 barrels per day (bpd) of crude oil out of the country.

Iraq is one of the biggest oil producers in the world, and it sends out an average of 3.3 million bpd.

SOURCE: NEWS AGENCIES