BAGHDAD – The Kurdistan Regional Government (KRG) has agreed to export 550,000 barrels per day (bpd) through the Iraqi state oil company SOMO as of next year, in return for its original monthly budget of roughly $1 billion which has been withheld by Baghdad since February.
The deal, if implemented, is the first sign of improving relations between Baghdad and Erbil, which deteriorated when Iraq froze the budget payments early this year.
According to their agreement, Erbil will boost Iraq’s total oil production by 550,000 bpd to 3.6 million bpd, and the Iraqi government will resume the monthly budget payments.
Iraq's oil production has fluctuated because of logistical restrictions and political mayhem. According to the International Energy Agency (IEA), production dropped to 3.1 million bpd from 3.6 million bpd in February.
Iraq has also been unable to export its oil according to its plans, as the Islamic State (ISIS) militants seized large areas in central and northern parts of the country, through which the pipelines cross.
“Of these 550,000 bpd, 300,000 bpd will be from Kirkuk oil fields and 250,000 from the Kurdistan Region,” said a close aide to the Kurdish delegation that visited Baghdad on Sunday for crucial oil and budget talks.
KRG Peshmarga forces have been patrolling Kirkuk oil fields since early June this year, when Iraqi army divisions withdrew from much of the northern provinces in the wake of ISIS military advances.
All oil export from Kirkuk has been halted ever since the jihadists either destroyed or captured the outgoing pipelines from the oil rich province.
Kirkuk stands for roughly 10 per cent of Iraq’s total oil reserves, or 10-15 billion barrels of oil.
The only remaining way to export Kirkuk’s oil is to use the Kurdistan Region’s pipeline, which is connected to the Turkish Ceyhan port, sources tell Rudaw.
“We already export 320,000 bpd of our own oil, but according to the agreement as of next year we will be exporting 150,000 bpd through the Iraqi owned SOMO and we still export another 170,000 bpd via our own contacts,” said one source, an aide.
Last week, the KRG received $500 million from the Iraqi government as the first instalment of a $1 billion deal. Iraqi Prime Minister Haidar Abadi has “principally agreed to send the rest of the instalment in December,” said the aide, who spoke to Rudaw on condition of anonymity.
