Baghdad, Erbil Trade Accusations on Oil Payments

Shiaa replied: “A recent meeting to discuss the dues to Western oil companies operating in the Kurdistan region was held in the presence of Abdel Basset Turki, head of the Supreme Audit Board. Turki presented documents proving that the KRG informed Baghdad that it has exported 160 million barrels of oil recently. Yet, it has paid the federal government a sum that only covers 56 million barrels. Where is the sum equivalent to the remaining 104 million barrels?”

Shiaa added: “When we confronted the Kurdish MPs with these documents, they said that they will ask the minister of natural resources in the KRG to come to Baghdad and explain the issue.”

He continued: “Kurdish MP Farhad Atrushi said in a press conference a while ago that extracting a barrel of oil costs up to $50 in Iraq, according to the share of the Federal Oil Ministry in the budget. Yet the government in Baghdad does not say that to Iraqis. Rather, it says that the cost of extracting a barrel of oil is two dollars.” Shiaa added: “When we requested the federal Oil Ministry explain that, the answer was that its financial allocations in the 2013 budget do not only cover the cost of extraction for this year, but rather many more years, which Atrushi did not mention.”

Shiaa said: “We gave the Kurdistan region two options: receive the dues to Western oil companies in the form of treasury bonds, or from the abundance coming from the increased oil exports. And we have not received the answer yet.”

He asked: “The semi-autonomous region gets 17% of Iraq's budget. Does it really produce 17% of Iraq's oil?”

Parliamentary sources in Baghdad said that the lack of an agreement on Iraq’s budget for 2013 goes back to the fact that political blocs have escalated their demands. The State of Law coalition — led by Maliki — is attempting to reduce the share of the Kurdistan region from 17% to 11%, which is strongly opposed by the Kurds. On the other hand, the Kurds seek to add a clause to the budget regarding the extraction cost, guaranteeing that the dues to foreign companies operating in their provinces will be paid.

Omar al-Shaher is a contributor to Al-Monitor’s Iraq Pulse. His writing has appeared in a wide range of publications including France’s LeMonde, the Iraqi Alesbuyia magazine, Egypt’s Al-Ahaly and the Elaph website.

2 Responses to Baghdad, Erbil Trade Accusations on Oil Payments

  1. Lorenzo 5th March 2013 at 23:26 #

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

  2. Re da Caste 6th March 2013 at 22:07 #

    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.