Kur­dis­tan pushes for its in­de­pen­dent oil company after $500 mil­lion deal with Iraq

The Kurdish Globe - - NEWS -

Cau­tious op­ti­mism spread after a land­mark deal that de­mands the Kur­dish Re­gion to send oil to Bagh­dad in re­turn for $500 mil­lion bud­get boost.

A pre­lim­i­nary deal be­tween Bagh­dad and Kur­dis­tan Re­gional Gov­ern­ment ( KRG) to re­solve long-run­ning fi­nan­cial dis­putes over oil has re­duced a cri­sis to a na­tional unity, Iraq’s Oil Min­is­ter said on Fri­day.

Ear­lier, speak­ing at a press con­fer­ence, KRG Prime Min­is­ter Nechir­van Barzani said that if the two sides won’t reach an agree­ment, then KRG will have other op­tions, warn­ing about in­de­pen­dence.

There has been ten­sion be­tween the Cen­tral Gov­ern­ment and the semi­au­tonomous Re­gion of Kur­dis­tan over oil is­sues.

Bagh­dad op­poses the KRG’s in­de­pen­dent ex­port of oil and the Kur­dish lead­ers, on the other hand, crit­i­cize Bagh­dad for with­hold­ing bud­get pay­ments of the Re­gion.

In a first move to end the dis­putes the two sides have now agreed to end the con­flict. Ac­cord­ing to the deal, Bagh­dad is to pay $500m to Kur­dis­tan in ex­change for the trans­fer of 150,000 bar­rels of oil per day to the Fed­eral Gov­ern­ment.

The oil ear­marked for Iraq’s Cen­tral Gov­ern­ment will be ap­prox­i­mately half of the KRG’s nor­mal pro­duc­tion.

Just as ten­sions be­tween the two sides seem to ease, the Kur­dish Par­lia­ment is set to vote early next week on pro­pos­als that would re­duce the KRD's ties with Bagh­dad.

Law­mak­ers will vote on a bill to cre­ate a bank ac­count that will con­sol­i­date the Re­gion’s oil rev­enues, and to es­tab­lish a pub­lic-owned company that would take charge of dis­cov­ery, pro­duc­tion and ex­port of oil.

The cre­ation of a Kur­dish company ded­i­cated to man­ag­ing the Re­gion’s oil would be a sig­nif­i­cant step to­wards the in­de­pen­dent ex­port of oil, but it could take years to im­ple­ment.

The on­go­ing cri­sis be­tween Bagh­dad and the KRG has cre­ated "a rift that threat­ens not only eco­nomic, se­cu­rity and po­lit­i­cal in­ter­ests, but also the na­tional unity," Iraqi Oil Min­is­ter Adel Ab­dul Mahdi said in a state­ment.

The dis­pute was harm­ing both sides, with Iraq los­ing oil rev­enues and the Kur­dish Re­gion not re­ceiv­ing fed­eral bud­get pay­ments, ac­cord­ing to Ab­dul Mahdi.

But Fri­day's agree­ment, while not fi­nal, "opens the way" to per­ma­nent so­lu­tions.

UN Iraq en­voy Nick­o­lay Mlade­nov also hailed the deal, call­ing it "a very im­por­tant first step."

"This agree­ment will al­low pub­lic sec­tor em­ploy­ees in the gov­er­norates of Er­bil, Do­huk and Su­laimaniyah to be­gin re­ceiv­ing their salaries. It will also al­low the Kur­dis­tan Re­gional Gov­ern­ment to re­sume its con­tri­bu­tion to the fed­eral bud­get at a time of na­tional cri­sis," Mlade­nov said in a state­ment.

The deal was reached at a meet­ing in the Kur­dish cap­i­tal Er­bil be­tween Ab­dul Mahdi, the Kur­dish Prime Min­is­ter Nechir­van Barzani and his deputy, Qubad Tal­a­bani, the KRG said in a state­ment on Thurs­day.

The visit to Er­bil was the first by Ab­dul Mahdi since his ap­point­ment as Iraq’s Oil Min­is­ter in Septem­ber. He re­placed Hus­sein al-Sharhis­tani, who took a strong stance against in­de­pen­dent Kur­dish oil ex­ports.

The ex­ports be­gan in May 2014, when Kur­dish of­fi­cials an­nounced a ship­ment of oil to the Turk­ish port of Cey­han. KRG Premier Barzani Barzani is now due to head a del­e­ga­tion to Bagh­dad in the com­ing days, aimed at reach­ing “a com­pre­hen­sive, fair and con­sti­tu­tional so­lu­tion to all out­stand­ing dif­fer­ences be­tween the Fed­eral Gov­ern­ment and the KRG," the Kur­dish gov­ern­ment said in a state­ment.

The bud­get dis­pute has lasted almost a year and had led to a sharp de­te­ri­o­ra­tion of re­la­tions.

Re­solv­ing the bud­get feud is seen as an es­sen­tial step in im­prov­ing co­op­er­a­tion at a time when both are bat­tling the Is­lamic State group, which has over­run large parts of Iraq since June.

How­ever, there re­main sig­nif­i­cant hur­dles to find­ing a last­ing so­lu­tion to all the con­flicts.

Kur­dish politi­cians claim they are owed large sums in bud­get pay­ments, which were halted in Jan­uary 2014 in protest of the KRG’s oil ex­ports.

The huge Kirkuk oil field in Kur­dis­tan is also a point of con­tention – the fed­eral gov­ern­ment and the KRG both claim con­trol of the field.

“There are is­sues that need to be re­solved, but this is an im­por­tant agree­ment,” Iraqi Fi­nance Min­is­ter Hosh­yar Ze­bari said on Thurs­day.

“It has re­moved a ma­jor ob­sta­cle in reach­ing a con­clu­sive agree­ment in the fu­ture.” con­cluded the Min­is­ter.

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