ERBIL, Kurdistan Region — Iraq’s oil ministry signed a contract with Ranya International to build a refinery with the production capacity of 70,000 bpd in Kirkuk province.

The contract was signed on Thursday in the presence of Iraqi Oil Minister Jabbar al-Luaibi.

“Mr. Minister reiterated that the establishment of the Kirkuk refinery is a good first step for investment in the refinery sector to cover internal demand in the province and adjacent neighbors,” read an official statement published by the ministry on Thursday.

The minister added that the project falls into the plans and programs by the ministry for meeting the internal demand of oil derivatives, while exporting the surplus.

“The signing of the contract complements the efforts of the ministry to develop the oil industry in the Kirkuk province,” Luaibi added.

Other refineries are set to be established as a part of strategic projects by the ministry to increase national production of oil derivatives. 

“This will increase financial income of the Iraqi state’s treasury,” Ziya Jaffar, the counselor to the ministry added.

Ranya International is a company based in the Kurdistan Region, according to Reuters.

The Kurdistan Regional Government’s (KRG) revenues have been slashed by about half since the loss of Kirkuk, further worsening the Region’s financial crisis caused by Iraqi budget cuts since early 2014, low oil prices, and the war against ISIS. 

Iraq has banned the Erbil-based KAR group that operated a number of oil fields of Kirkuk. 

The Kurdistan Regional Government and the Iraqi federal government are locked in a stalemate over the 2018 budget. The KRG demands the return of its 17-percent budget share, while Iraq is proposing a 12.6 share, which the International Monetary Fund has said isn’t sufficient.