Update: 09.00 12/9/11: The Kurdish Regional Authority have in a statement denied that the export shutdown is deliberate, and has cited “serious operating malpractice” and “serious technical failures” with the region’s 100,000 bpd main export pipeline for the shutdown. “”The KRG remains committed to its interim agreement with the federal government of Iraq for exports of oil from Kurdistan’s fields until a permanent solution is reached based on the Constitution,” the statement said. The Iraq Oil Ministry expects export crude to resume pumping shortly.
The Kurdish Regional Authority has ordered the stoppage of all exports from the semi-autonomous region, days after issuing a strongly worded condemnation of the conduct of the central government on the progress of draft oil laws through parliament.
Iraqi Oil Minister Abdelkarim al-Luaibi, speaking to AFP in Ammam, said the KRA has today halted oil exports, without giving reasons. “This is a great loss for the Iraqi economy, as well as the Kurdish and Iraqi people in general,” he told AFP.
An oil ministry official told AFP that Kurdistan’s exports of 150,000 barrels of crude per day “dropped in the past two weeks to around 55,000 bpd.”
The development came after Kurdistan condemned the draft law, claiming it violated the Iraqi constitution, and accusing the Oil Ministry of sharp practice by rushing a new draft law under the noses of the Iraqi cabinet. It now appears that the KRA is willing to flex its fiscal muscle to exert influence over Baghdad.
The KRA has halted production for political reasons before, most notably in October 2009 when the parties were at loggerheads over the percentage of oil revenue to go to Baghdad, which was then 83%. Kurds object to so much of their regional resources being ploughed into oilfields and infrastructure around the supergiant Basra oilfields.
In addition to long-standing disputes over revenue sharing and the legal status of Kurdish production sharing agreements, Baghdad and Erbil remain in dispute over the boundary around the oil-rich town of Kirkuk, which the Kurds claim as part of their domain.
These developments highlight the risks inherent for the 41 independents producers operating in Kurdistan, who had already had to contend with export delays while the KRA and central Oil Ministry hammered out a temporary revenue-sharing arrangement.
