Brinkmanship by the Kurdish regional government (KRG) over oil exports and payments has been rewarded, as Iraq’s central government yesterday confirmed that the region is due to receive $560 million against $1.5 billion of oil export revenues the KRG says is overdue.
“We’ve allocated 650 billion Iraqi dinars ($559.4 million) in the 2012 budget to pay the companies, which we will release after we receive the audit from the board of supreme audit,” finance minister Rafie al-Esawi told reporters on the sideline of the Arab League summit on Tuesday, according to a Reuters report.
On the eve of the Arab League summit in Baghdad, the KRG released a statement announcing that it had drastically reduced oil pumped into the Iraqi pipeline to Ceyhan to 50,000 barrels per day, and threatened to halt exports in a month if Baghdad did not make payments against the $1.5 billion it says it is owed for oil exports to date.
The KRG picked its moment to escalate tensions with Baghdad. Prime Minister Nouri Al-Maliki’s government has been taking extraordinary measures in and around the capital to ensure security and that Baghdad appears in its best light, an effort which is reportedly costing $500 million.
Deputy Finance Minister Fadhil Nabi told Reuters a total of about $2.53 billion had been set aside as payment for oil companies working in Iraq, inclusive of the allocation to Kurdistan.
In default of oil laws properly administer payments to the regions, Baghdad and Erbil struck a temporary deal in January last year under which the KRG is to receive half of the export revenue attributable to the oil it produces, so that it can pay the companies developing the Kurdish oil industry.
To date the KRG has received $514 million from Baghdad, with no payments made in the last ten months. No date has been given for payment of the $560 million to the KRG.
The KRG has responded by promising to return exports to 100,000 bpd.
