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Statement/ Open Letter* by Iraqi Energy Experts and Professionals on the Latest Oil Agreement with KRG
H.E. the Prime Minister esquire;
H.E. the Speaker of the Federal Parliament esquire;
T.E: Members of the Federal Parliament and Ministers esquires.
On 2nd December 2014 a brief announcement was made in Bagdad pertaining to an oil agreement between the Iraqi Federal Government (IFG) and Kurdistan Regional Government (KRG). According to the said announcement (and related formal statements) it was emphasized that Iraqi oil belongs to all Iraqis; KRG will made available and transport a total of 550 thousand barrels per day (tbd) comprising no less than 250tbd oil produced by the KRG and 300tbd from Kirkuk; that total volume will be delivered to IFG through the pipeline system of the Region; IFG agrees to release KRG share in the annual budget (17%) and pays salaries and allocations for the Region’s military force-Peshmargah.
Since a true and complete text of the agreement has not been made public yet, our remarks were premised on the above brief announcement and related statements made by few officials. We observe that the agreement has positive and negative sides.
The most important positive aspects of the agreement are: the emphasis that Iraqi oil belongs to all Iraqis; KRG provides no less than 250tbd oil produced by the KRG for export purpose and it has melted the ice between the two sides. These positives remain though captured preventing the ability to build on them, which is not that easy due to the depth of the problems between the two governments.
As for the most significant negative aspects of the agreement it is not balanced and it did not address basic issues as it should be since these issues cannot be ignored any further. For clarification we register the following:
- According to the Federal Minister of Oil the export target for 2015 is 3.2 million barrel daily (mbd). The share of the Region at 17% would be 544tbd as compared with 550tbd committed by KRG towards the Federal Government. If we add the salaries and allocations for Region’s-Peshmargah and what is refined inside and outside the Region the balance will be tilted in favor of the Region at the expense of all Iraq public interest. Therefore this is Win-Lose not Win-Win deal, especially if the Region is exempted from sharing the Sovereign Expenses as implied by Mr. Hoshiar Zebari statement given to Iraq Oil Report when reportedly said KRG will receive its 17% full without Sovereign Expenses deduction.