Erbil-Baghdad Agreement: Deal or No 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.

Erbil-Baghdad Oil Relations Swing between Deal, no Deal

Encouraged by more international interest in purchasing its oil, coupled with the apparent failure of the federal Iraqi government to provide agreed-upon budget handouts, the autonomous Kurdistan Regional Government (KRG) has embarked on a new policy of unilateral independent oil sales.

Since the beginning of June, the KRG has unilaterally sold the bulk of oil produced from its zone as well as Kirkuk’s fields, much to the Iraqi government’s ire.

Figures compiled by the KRG’s Ministry of Natural Resources show that out of around 17 million barrels of oil pumped in June to the Turkish Mediterranean port of Ceyhan, almost 12 million barrels were sold directly by the KRG, cutting out the federal authorities in Baghdad. The rest was delivered to Iraq’s State Oil Marketing Company (SOMO).

Multiple KRG sources told Al-Monitor on condition of anonymity that the KRG has continued its independent oil sales in July. The official details of July exports from Kirkuk and the KRG zone are not yet available. A KRG official who asked not to be identified told Al-Monitor in vague terms, “The oil that is supplied to SOMO is … transferred to SOMO’s tanks in Ceyhan.”

But Tariq Gardi, an Iraqi Kurdish member of the Iraqi parliament’s Oil and Energy Committee, told Al-Monitor that in the first 20 days of July, the KRG supplied around 150,000 barrels per day from the Kirkuk fields to SOMO and up to half a million barrels from fields under its official jurisdiction in the Kurdistan Region. If true, those figures would be well below the 550,000 barrels per day (bpd) rate agreed upon by the KRG and the central government.

“This is a partial fulfillment of the deal, a new approach taken by the KRG,” said Gardi, who added that the Kurdish government has exported a daily average of slightly over half a million barrels of oil independently in July.

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