The Kurdistan Regional Government (KRG) of Iraq has halted oil exports from the self-ruled Kurdistan region following a payments row with the federal government in Baghdad.
According to representatives from the KRG, the federal government has allegedly failed to fulfil its commitment to pay $848 million to companies working in the region, while representatives from Baghdad have said that the payments were stopped because Kurdistan was pumping less than the 200,000 bpd that it had pledged.
Earlier this year, the KRG managed to pay a portion of outstanding debts to a number of operators in the region including DNO International ASA and Dana Gas.
Relations between the KRG and Baghdad have been strained over recent years, especially since the Kurdish government signed a number of PSCs with International Oil Companies like Exxon Mobil and Total, which Baghdad argues is a violation of federal control of oil reserves under the national constitution.
According to a report recently published by the IEA, Iraq could gain as much as $5 trillion in revenues from oil exports between 2012 and 2035, an average of $200 billion per year. But the friction between the KRG and Baghdad has been a constant thorn in the country’s growth plans with investors remaining weary about the costs of entering the country that remains politically uncertain.
Iraq exports approximately 2.6 million barrels a day of crude and will increase this to 2.9 next year, the nation’s average crude output is approximately 3.2 barrels, with oil capacity at 3.4 million barrels. The country aims to increase production to more than 3.5 million bpd by 2013 for the first time since the outbreak of the Iran-Iraq war in 1980, over three decades ago.Â
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