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ECONOMY
PUK Leader Bafel Talabani. Photo: PUK Media; Boat sails in Umm Qasr port on February 11, 2023. Photo: AFP; Graphic: Rudaw
ERBIL, Kurdistan Region - Iraq’s national oil company should sell the Kurdistan Region’s oil and all revenue should be deposited into one common treasury, the head of the Patriotic Union of Kurdistan (PUK) said on Sunday.
PUK leader Bafel Talabani said that following the ruling by the Paris arbitration court against the Kurdistan Region’s oil exports, “it is time to make the right decision”.
“SOMO Company should sell the Kurdistan Region’s oil and the total oil revenue across Iraq be deposited into one treasury,” Talabani said in his statement.
Oil firms operating in the Kurdistan Region have stopped production or reduced output and diverted it into storage after a Paris arbitration court late March ruled that Turkey had violated an agreement with Iraq by allowing the Region to begin independent oil exports in 2014.
Representatives from the Kurdistan Regional Government (KRG) have met with the federal government and an agreement on the resumption of oil exports through the Iraq-Turkey pipeline is expected to be announced soon, a source in Iraq’s state-owned oil firm said on Sunday.
The details of the deal have not been made public, but a well-informed source told Rudaw that other meetings will be needed to clarify the KRG’s contracts with international oil companies (IOCs) as well as finding new buyers for the oil at the Turkish port. The agreement is expected to provide stability for the IOCs and buyers.
The SOMO source added that “many” issues were agreed upon by Erbil and Baghdad in the latest agreement.
Rudaw understands that the agreement consists of joint oil exports by the KRG’s Ministry of Natural Resources and SOMO. The revenue from the exports will be stored in an account managed by the KRG under the observation of the federal government in Iraq, the source added.
Talabani added in his statement that Baghdad and Erbil should agree to decide the Kurdistan Region’s share of the federal budget in the budget law, the Region’s employee salaries and stipends be guaranteed, and the system of fuel, kerosene, and gas of the Kurdistan Region be linked to Iraq.
The KRG started exporting oil independent of Baghdad in 2014. Following the war against Islamic State (ISIS) in 2014 and disputes with Baghdad over the KRG’s oil sales, with a shortage of cash, the government took temporary austerity measures to reduce the salaries of higher-earning employees in June 2020. Those earning more than 300,000 Iraqi dinars per month were hit with a 21 percent pay cut.
The Region has experienced several waves of protests over the years due to delayed salaries and austerity measures, which are directly blamed on the KRG and its independent oil sales as many of the Region’s contracts with international oil companies signed in the early stages were signed with prepayment schemes, and the Kurdistan Region owes a large amount of money to those companies. This has made the region unable to pocket over 50 percent of its oil revenues at any point throughout the past eight years.
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