Baghdad, Erbil Trade Accusations on Oil Payments

By Omar al-Shaher for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Baghdad and Erbil, the capital of the semi-autonomous Kurdistan region of Iraq, have exchanged accusations over the payment of foreign oil companies for extraction costs, which the Kurdistan Regional Government (KRG) demands that the federal government honor. This cost stands at around $4 billion.

Kurdish MP Farhad Atrushi said that the federal government is delaying the payment of dues to oil-extracting companies operating in the provinces of Erbil, Sulaymaniyah and Dahuk in the Kurdistan region. Yet, an MP and close associate of Iraqi Prime Minister Nouri al-Maliki replied that so far, Baghdad has paid Erbil $1 billion in oil-extraction costs, while it has received revenues from 56 million out of 160 million exported barrels, according to documents.

Shiite MP Abdul Abbas Shiaa said, “The $1 billion exceeds the cost of extracting 56 million barrels, from which revenues were received from the region. Yet, it is demanding $4 billion as payment for extracting 160 million barrels, of which Baghdad received the revenues for only 56 million barrels.”

Atrushi said, “$20 billion in Iraq’s budget has been allocated to the Oil Ministry from the sovereign expenditures, while oil will be extracted from fields spread over easily accessible locations. Moreover, Iraq’s oil contracts with the oil-extraction companies [are intended] to provide services, so why [are] all these allocations [needed]?”

He added: “Baghdad tells us that the dues to foreign companies operating in the region will be paid from the abundance of oil revenue. This amount will never be reached, because the government is defrauding parliament annually, and with the fraud, the extra amounts are lost.”

He said: “I find this logic strange. Is the region producing onions or tomatoes? Doesn’t the region produce oil, just like you do? Why is your oil sovereign and ours not? Is there a first-class and second-class oil?”

2 Responses to Baghdad, Erbil Trade Accusations on Oil Payments

  1. Lorenzo March 5, 2013 at 11:26 pm #

    No smoke without a fire. Is there any decent man in the government? 80 billion USD?

  2. Re da Caste March 6, 2013 at 10:07 pm #

    Iraq is a banana republic. As a investor I must realize the fight between Baghdad and Erbil has got only one solution: a Kurdish state, a Shia state and a Sunni state. Maliki is dividing the country more and more and Talabani is not able to fulfil the job. The budget will not be approved and the split is a fact.