Future Uncertain for Baghdad-Erbil Oil Deal

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

While a recent deal between Baghdad and Erbil to export oil from the northern fields is seen by many as a breakthrough after years of stalemate, the prospect of further progress on oil exports still remains uncertain.

On Nov. 13, Iraq’s oil minister, Adil Abdul-Mahdi, and Iraqi Kurdish authorities reached a deal whereby the Kurdistan Regional Government (KRG) will export 150,000 barrels of oil per day.

In return, the Baghdad government will possibly deliver as much as $1 billion to the KRG, which has been struggling to pay its employees and fund public projects ever since the central authorities in Baghdad cut its budget in February.

The very terms of the deal, however, still remain somewhat vague. The KRG’s official website stated Nov. 13 that the federal authorities in Baghdad will pay $500 million to the Iraqi Kurdish government, and that the KRG will place “150,000 barrels a day of crude oil” at the disposal of the Iraqi government.

A day later, the Iraqi Ministry of Oil issued a statement reiterating the same information.

But during a joint press conference with Turkish Prime Minister Ahmet Davutoglu on Nov. 21, KRG President Massoud Barzani offered new details on the amount of the payment and where the oil would come from.

“We have agreed that Baghdad will send $1 billion to [Iraqi] Kurdistan through two $500 million installments and in return we will export 150,000 barrels of oil per day from Kirkuk,” said Barzani.

His statement amounted to a bombshell as the figure he gave was higher than previously stated, and he also said the oil will come from Kirkuk's oil fields, a detail not disclosed officially before.

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