Crude exports from the Kurdistan region of Iraq dropped to 50,000 bpd and may cease in a month if Baghdad refuses to pay about $1.5 billion owed to producers, Kurdistan Regional Government (KRG) authorities have said.
Kurdistan started shipping oil again in February 2011 after an interuption of more than a year following a long-standing dispute between the two authorities over oil revenues.
Iraq's central government maintains that it alone has the right to export oil, while authorities in Kurdistan say they should have control of oil in their region.
The dispute over control of Kurdistan's oil revenues has restricted payments to producers in the north, such as Norway's DNO, and helped keep most major oil companies out of the region until now.
“This latest chapter in the protracted struggle between the central and regional government puts something of a downer on the realization of Iraq’s vast crude export potential,” JBC Energy GmbH, a Vienna-based consultancy founded by Managing Director Johannes Benigni, said in a note today.
The Kurds export crude through a pipeline controlled by the central government, which paid producers in the Kurdish region a total of $514 million last year.
“We still remain hopeful that the authorities in Baghdad will realize the damage being caused to Iraq’s economy by their continued failure to comply with their commitments,” the KRG said.
(Sources: Bloomberg, Reuters)