Minister says KRG referendum will not have an impact on Iraqi oil production

The Kurdish region’s independence referendum will not have an impact on Iraq’s oil production, but Baghdad will guard its national interest, Iraq’s oil minister Jabar Al Luaibi said yesterday.

“There is no relation between the Kurd referendum and the production of Iraq,” said Mr Al Luaibi on the sidelines of the Energy Markets Forum in Fujairah. The issue is “political,” he said.

The Kurdistan Regional Government (KRG) will hold a referendum on September 25. Iraqi prime minister called on the region’s government to suspend the poll, saying it “threatens Iraq’s national security.”

The United Nations, Turkey, Iran and the US have all urged the KRG to resolve issues with Baghdad via negotiations rather than secession.

“We are interested in guarding our interest as a country,” said Mr Al Luaibi. “We hope the Kurds will change for the interest of Kurdistan as well as Iraq and the region.”

But Mr Al Luaibi said that the Iraqi government was taking steps not to magnify areas of difference with the KRG, especially the treatment of oilfields in the Kirkuk region.

“We hope that things will be settled in a wise political decision,” he said.

If it goes ahead, the referendum is expected to have a minimal impact on the oil prices.

“The immediate impact of the referendum on the market will likely be marginal given the global market is currently well supplied and we do not expect any processes to initiate the secession of Kurdistan following the vote,” said BMI Research yesterday.

“According to our estimates, less than 12 per cent of Iraq’s oil output, around 500,000 barrels per day, is currently produced in the Kurdistan region.

The KRG in recent weeks has resolved a series of its disputes with oil and gas firms ahead of next week’s vote.

The authority agreed to pay US$1 billion and a further $1.3bn in future receivables to the Peal Petroleum consortium, led by the UAE’s Dana Gas, bringing to an end a dispute over payments launched in 2013.

Genel Energy and DNO also reached a settlement agreement with the KRG in August over outstanding payments owed from 2014-15.

Meanwhile, Mr Al Luaibi said that some oil producers have raised the prospect of deepening production cuts by a further 1 per cent to further boost prices.

“There are some thoughts and ideas, but no firm decision has been taken,” he said. “The dynamo of the decision is the oil market, the prices and the stability of it.”

Mr Al Luaibi said that Iraq has spent 30 to 40 per cent of its oil revenues on its fight against ISIL.

“The cost was high and we paid the price,” he said.

We hope the Kurds will change for the interest of Kurdistan as well as Iraq and the region JABAR AL LUAIBI Iraq oil minister