Barzani Accuses Baghdad of Reneging on Oil Agreement

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Prime Minister of Iraqi Kurdish Regional Government (KRG) Nechirvan Barzani gives a speech during a forum named "Economic and Social Impact Assessment of Kurdistan region" in Erbil, Iraq on February 12, 2015. Anadolu/Emrah Yorulmaz

Published Tuesday, February 17, 2015

Iraqi Kurdish premier Nechirvan Barzani on Monday accused the Baghdad government of failing to give his autonomous Kurdish region its share of oil revenues despite a deal signed in December.

Under the deal that should have taken effect from the start of the year, 250,000 barrels per day (bpd) of oil were to be exported from the autonomous region and another 300,000 bpd from the disputed province of Kirkuk.

Oil from the Kurdish region or claimed by its leadership would be shipped out via Kurdish pipelines but through the federal oil company. In return, Baghdad would release the regional government's share of national revenue, which had been frozen for more than a year in retaliation for Erbil's efforts to export oil unilaterally.

Barzani said that in return for the export of 550,000 bpd, the Kurdish region was due to get "1.2 trillion dinars ($1 billion) from Baghdad" each month through Iraq's state marketing authority SOMO. However, he announced Baghdad had only offered to send $300 million in Sunday's talks with his Iraqi counterparts, "less than half of what we agreed on earlier."

Barzani warned on January 29 that Erbil could not send oil to Baghdad, saying the Kurdish region was also facing an economic crisis.

"We solved our problems with the federal government yesterday. We told Baghdad that we will deliver the determined amount of oil," he said.

However, Rudaw online newspaper published a comment by Barzani saying that "if they don't send the budget, we won't send oil.”

The Kurdish premier said the December agreement, which had been seen as a breakthrough in resolving longstanding disputes over oil and budget and in enabling Baghdad to pass a budget last month for the first time since 2013 "currently has no meaning."

"Baghdad has no money to give... We made a deal with a state that was originally broke, and Iraq today is broke," he told a news conference in the Kurdish capital.

Barzani on Sunday led a delegation to Baghdad for talks with Iraqi Prime Minister Haider al-Abadi.

"We invited the prime minister to visit Kurdistan, and he accepted the invitation and promised to come," said Barzani without giving a date.

Abadi's office said in a statement that the prime minister and the Kurdish delegation discussed how to resolve "pending issues ... within the framework of the constitution." The two sides also discussed "the economic challenges that are facing the country."

"Iraq is facing many challenges including economic ones due to falling oil prices and the effect they have on the budget," the statement added.

Abadi said his government was "committed" to the oil deal with the Kurds, echoing Barzani who also insisted he wanted to see the problem resolved.

Baghdad is almost entirely dependent on oil revenues and Erbil is in desperate need of cash to pay its civil servants and shore up its security.

Dr Izzet Sabir, president of Economy and Finance Commission and Kurdish lawmaker, had said that 95 percent of Iraq's budget came from oil exports, while the regional government needed at least $10 billion to overcome the economic downturn, the biggest crisis in the past 22 years.

Falling oil prices have hit Iraq hard at a time when its expenditures have increased due to the battle against the Islamic State of Iraq and Syria (ISIS) jihadist group which overran large areas of the country last year.

At the end of January, parliament approved a $99.6 billion budget, down from $102.5 billion that had been proposed by the cabinet, due to low oil prices.

Oil prices declined more than 60 percent in the last seven months, reaching their lowest point in almost six years in mid-January, and recording the fastest slump since 2008. On the other hand, Iraq's total oil production has increased from 1.3 million barrels per day in 2003 to three million barrels per day in 2013, according to US Energy Information Administration.

The Gulf country averaged 3.4 million barrels of oil output in 2014, a rise of 300,000 barrels per day from the previous year.

Iraqi Oil Minister Adel Abd al-Mahdi said January 19 that the Gulf country was producing oil at a record level of four million barrels a day, while its exports were expected to increase from three to 3.3 million barrels per day in 2015.

However, Iraq's total oil exports for January fell 14 percent, compared to the previous month, as it gained $3.2 billion, which is $2 billion less than December, according to its Ministry of Oil.

(AFP, Reuters, Anadolu, Al-Akhbar)

Comments

In my reckoning 17% of 3.2 billion is at least some 600 million, so even in that light the KRG should receive double what was mentioned.

They are being f---d with.

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