Oil row boils over as Baghdad ‘refuses’ KRG’s full share
BAGHDAD - Iraq’s central government has refused to send the Kurdistan Regional Government (KRG)’s share of oil revenue for the month of April which were previously agreed to, sources told Rudaw on Thursday.
“Iraqi Prime Minister Haidar al-Abadi will not approve a payment which equals the total amount of oil sold by the KRG at the Turkish Ceyhan port last month,” the source said on condition of anonymity because he was not authorized to speak to the media.
The source said Baghdad will not include the export of oil from Kirkuk’s fields into the KRG’s share of the total revenue, deepening a long-standing disagreement between Erbil and Baghdad.
The governments reached a groundbreaking agreement in December last year, which ended simmering disputes between the two governments over share of oil revenues.
According to the deal, the KRG was obliged to export 550,000 barrels of oil per day (bpd), including 300,000 bpd from Kirkuk’s oil wells, in return of Kurdistan’s 17 percent share of the total revenues. The sale would take place in the Turkish port of Ceyhan through Iraq’s State Oil Marketing Organization (SOMO).
“PM Al-Abadi has authorized a payment of $543 million for the month of April which is less than the $856 million that the KRG expected for the same month,” the source said.
Rudaw has obtained documents from the Kurdish Ministry of Natural Resources, which show the KRG exported 16.3 million barrels of oil in April through the Iraqi SOMO. Baghdad says it has only received 15.3 million, excluding the exported of oil from Kirkuk.
Iraq has been unable to export oil from Kirkuk’s vast oil wells on its own since last year because much of its northern pipelines were either destroyed or controlled by the Islamic State
KRG Peshmerga forces have been patrolling the oil fields since June when the Iraqi Army withdrew from the area. Kurdish security forces, known as the Asayish, have been in charge of the security in the oil-rich city since 2003.
The source told Rudaw that the two governments disagreed on the market price of oil; Baghdad setting the price at $56 while Erbil demanded $58. The price of crude oil in May is near $65.
“Iraq’s Finance Ministry asked PM Abadi to authorize a $625 million payment to the KRG for April as a compromise solution, but it was turned down by the Iraqi PM,” the source said, adding that Abadi has authorized only $543 million.
Iraq’s oil export hit a record in April as the country exported 3.07 million bpd last month compared to 2.98 million bpd in March 2015.
The increase in oil production was possible after the December agreement between Erbil and Baghdad which boosted Iraqi oil industry to a much-needed 500,000 bpd.
The KRG announced last month it will be able to increase its production to 650,000 bpd before summer.