By Simon Kent.
In a striking admission of the policy of the Kurdish Regional Government (KRG) Minister of Natural Resources Ashti Hawrami (pictured) has described the outcome of the political deadlock with Baghdad, which has led to secret oil exports by the KRG.
Quoted in Reuters, Hawrami says that following former PM Nouri-al Maliki's blocking of the KRG budget last year (in theory 17% of the national budget) the KRG had a greater incentive to export oil unilaterally, and began doing so in May.
In November last year, a deal had been reached whereby the Kurdish region supplied the Iraqi State Oil Marketing Company with 400,000 BPD in exchange for the full budget, but the KRG cited technical problems as the reason why the 400,000 BPD target could not be met. Baghdad subsequently withheld funds and the deal collapsed.
Since then, Baghdad has threatened to sue companies involved in the export of Kurdish oil, with an American court upholding a ruling in favour of Baghdad earlier this year, forcing a tanker to leave port in the US without unloading.
The Iraqi Kurds then used Israel and Malta, in addition to decoy ships and unloading onto another tanker at sea, to evade ship tracking data, with limited success. For this, they employed the help of oil trader Murtaza Lakhani.
The deadlock continues, with Hawrami saying a return to last years deal is not possible.