A new age is dawning over oil in Iraq, as this week sees several important steps made towards agreement between two powerful political centers.
Kurdistan, the semi-autonomous territory in Iraq, has agreed to keep exports steady at 140,000bpd and then raise them to 200,000bpd by the end of the year, according to Reuters.
We wrote this week that Baghdad took the first step in settling the ongoing dispute over oil and oil payments with its northern region by agreeing to pay oil companies operating there. In return, we learn today, Kurdistan has made these promises on oil exports.
Kurdistan halted shipments of oil earlier this year in a sign of protest, because the central goverment refused to honor the region’s contracts with oil companies, branding them illegal. Baghdad has also threatened to reduce Kurdistan’s share of the budget by billions of dollars.
The revenue from the restarted exports will quickly amount to billions of dollars. The central government currently needs to pay less than $1bn to the oil companies.
The steps taken this week bring the two sides closer to being able to agree a legal framework for future oil deals and oil revenues.
Oil companies operating in the region, such as Gulf Keystone saw their share prices rise on the news.
Sources: Reuters; Kurdistan Alliance.