Baghdad-Erbil Deal Silent on KRG's Surplus Oil

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.

The new oil agreement between Iraq’s federal government and the autonomous Kurdish government in the north appears to have left some room for confusion as to what the Kurds should do with the significant amount of oil that they do not export under Baghdad’s supervision.

According to the deal signed on Dec. 2, the Kurdistan Regional Government (KRG) pledges to export under Baghdad’s supervision 300,000 barrels of oil per day from oil fields it controls in Kirkuk province in addition to 250,000 barrels per day produced from the three provinces officially under the KRG’s jurisdiction.

In return, the Iraqi government will hand 17% of the national budget to the KRG. The deal will take effect from the beginning of the coming year.

However, the KRG produces more oil than the 250,000 barrels mentioned in the agreement. Dilshad Shaban, deputy chairmen of the energy committee in Kurdistan parliament, told Al-Monitor that the region currently produces 500,000 barrels per day, of which 150,000 is for domestic consumption and the rest used for export.

Hence, the key question is what the KRG will do with the remaining 100,000 barrels.

In a statement to the news media Dec. 3, KRG Deputy Prime Minister Qubad Talabani said that under the new deal with Baghdad, KRG oil exports would be legal, in an apparent reference to the remainder of produced oil not covered in the agreement.

However, Iraq’s Oil Ministry issued a counterstatement Dec. 6, saying the position of the Iraqi Oil Ministry and government was unchanged with regard to “the illegality of any oil dealings outside the numbers and frameworks” put forward in the bilateral agreement. It also denied the existence of any “verbal or written agreements” that might have given KRG the right to export oil outside the framework of the agreement.

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