Oil Crisis Not About Money …

This article was originally published by Niqash. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Iraqi Kurdistan vs Baghdad: Oil Crisis Not About Money, its About Independence

The announcement by Iraqi Kurdistan that they had started exporting oil to Turkey, despite numerous warnings from Baghdad, has sparked yet another crisis. But as various experts suggest, the crisis is not about business, it’s all about politics and Iraqi Kurdistan’s increasing financial independence.

A few days ago the Ministry of Natural Resources in the semi-autonomous region of Iraqi Kurdistan announced that it had resumed sending oil to Turkey. The oil was going through a dedicated, newly completed pipeline straight to Turkey’s Mediterranean port of Ceyhan. Iraqi Kurdistan had already exported 2 million barrels of crude oil to Turkey in January and now says it’s aiming to export between 10 and 12 million barrels per month by the end of the year.

The Iraqi Kurdish move comes despite plenty of pressure from Baghdad, where the Iraqi federal government has been trying to prevent the Iraqi Kurdish from going it alone with oil exports.

“The federal government has made every possible effort to persuade the region to stop any oil exports that have not been approved of by the central government,” a leading MP from the State of Law bloc and adviser to the Prime Minister , Sami al-Askari, told NIQASH. “We’re waiting for a reaction to our last attempt to dissuade them. We’re hoping the region will respond positively to Baghdad’s terms and conditions.”

If Iraqi Kurdistan doesn’t respond the way Baghdad wants them to, al-Askari says that the federal government will take legal action and it will also see to it that the semi-autonomous region doesn’t get its share of the national budget; most of Iraq’s income is from the sale of oil and that share is based on how much oil revenue the region itself brings in, among other factors.

Iraqi Kurdistan shouldn’t be twisting the central government’s arm, argued Khalid al-Asadi, another senior member of the ruling State of Law coalition. “There are negotiations taking place to resolve this issue through diplomatic means and with dialogue,” he said.

The latest reports indicate that negotiations are making some progress. The central government had been insisting that the SOMO oil marketing company, the only company legally able to conclude crude oil sales in Iraq, be involved in the Iraqi Kurdish crude sales. However on the weekend, one Iraqi Kurdish MP was quoted as saying that Baghdad’s attitude toward this had been relaxed.

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