An Iraqi military vehicle is parked at an oil field in Kirkuk on October 16. Photo: AFP
ERBIL, Kurdistan Region – Baghdad lost $5 billion in revenue because it didn’t want to make a deal with Erbil over exporting Kirkuk oil, according to the spokesperson for the Kurdistan Regional Government (KRG).
The KRG offered Baghdad use of its pipeline to Turkey to sell Kirkuk oil when Prime Minister Nechirvan Barzani sat down with Iraq’s Haider al-Abadi at the World Economic Forum in Davos, Switzerland in January, Safin Dizayee told reporters on Thursday.
Under the agreement, Iraq’s state oil company SOMO could export 250,000 to 300,000 bpd of Kirkuk’s oil through the pipeline to Turkey’s Ceyhan port, paying the KRG $200 - $250 million in export fees that would go into the Kurdistan Region’s private sector, not the government, he explained.
After the meeting in Davos, the Barzani’s office released a statement saying the two leaders had agreed that Iraq’s Ministry of Oil and the KRG’s Ministry of Natural Resources would meet to talk about restarting exports of oil that had been suspended since Iraq took control of Kirkuk’s oil fields.
The two sides appeared close to making a deal in the weeks after Davos, but nothing was ultimately concluded.
The problem lay with Baghdad which never made a final decision, according to Dizayee, who posited the reason was unwillingness to pay money to Erbil.
“That is, instead of giving $250 million as exportation fees in a year, they lost $5 billion in revenues,” he said.
This $5 billion in lost revenues could have been spent in Basra, Dizayee pointed out.
Iraq began exporting some of Kirkuk’s oil to Iran by truck in a scheme that is fraught with problems.
Baghdad has talked about building its own pipeline to Turkey, but a concrete plan has yet to be revealed. And any pipeline would have to pass through Kurdistan Region territory.
Iraqi forces took control of Kirkuk and other disputed areas in October – part of Baghdad’s effort to exert federal control over the autonomous region after the independence referendum.
The Kurdish Peshmerga had secured Kirkuk during the war against ISIS after Iraqi forces retreated ahead of the terror group’s advances.
ISIS no longer holds any significant territory in Iraq, but it remains a serious security threat. Remnants and sleeper cells carry out hit-and-run attacks.
The militants are able to operate unchecked in areas south of Kirkuk where the Iraqi army is not present.
“ISIS militants are attacking villages and people in these areas. We hear heartbreaking incidents in these places daily,” said Dizayee, renewing calls for the Peshmerga and Iraqi forces to jointly secure the area with the backing of the international coalition.