Oil Deal a Sign of Hope between Baghdad, Erbil

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

As soon as the oil agreement signed Dec. 2 between the Iraqi government and the Kurdistan Regional Government (KRG) was announced, optimism emerged in Iraqi and international circles, which considered the agreement to be the gateway to achieving a comprehensive Iraqi reconciliation.

The agreement put an end to years of conflicts over the mechanisms of oil investment and export, yet certain political parties expressed doubt, to a point where State of Law Coalition representative Hanan al-Fatlawi described the agreement as being a “national disaster.”

The agreement was signed in Baghdad by KRG Prime Minister Nechirvan Barzani and Iraqi Prime Minister Haider al-Abadi on Dec. 2. It states that the KRG should send 250,000 barrels of oil per day to the Iraqi government, and it should export 300,000 barrels of Kirkuk oil through the KRG-Turkey pipelines.

In return, Baghdad will give the KRG its share of the Iraqi budget, amounting to 17%, in addition to sending support for the Kurdish peshmerga forces in terms of armament and salaries, considering them part of the Iraqi defense system.

Immediately after this announcement, the agreement received international support. US Secretary of State John Kerry described it as “a step forward in achieving stability in the region,” stressing that “the US has a great interest in the progress made by Abadi’s government.”

The Iraqi Oil Ministry told Al-Monitor there was confusion over the interpretation of the export of Kirkuk oil, as stipulated in the agreement. The ministry’s spokesman, Assem Jihad, said Kirkuk’s oil production would be under the supervision of the North Oil Co., and that the current production plan aims at exporting 300,000 barrels per day through the KRG. In addition, a portion of the production will be transferred to the Baiji refinery.

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