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ECONOMY
A Kurdistan Region police officer stands on watch at an illegal oil refinery being shut down on June 16, 2020. Photo: Bilind T. Abdullah/Rudaw
ERBIL, Kurdistan Region – The Kurdistan Regional Government (KRG) slashed its oil exports by more than 100,000 barrels per day (bpd) in June, in compliance with international production cuts, according to a market researcher. The KRG’s Ministry of Natural Resources, however, has denied reducing oil exports.
To bolster recovering oil prices, members of the Saudi Arabia-led Organization of the Petroleum Exporting Countries (OPEC) and allies agreed in mid-April to cut production for May and June. On June 6, they extended the cuts for another month.
Iraq is a member of the cartel and the KRG expressed its readiness to comply. In June, Erbil exported 267,000 bpd, down from 368,000 bpd in May, S&P Global Platts reported on Friday.
These export figures have not been confirmed by the KRG. Member of the Kurdistan Region Parliament Hevidar Ahmed told Rudaw by telephone that there have been no reductions in oil exports. Ahmed is deputy head of parliament's finance committee.
The KRG’s Ministry of Natural Resources subsequently issued a statement that the reported cut “is far from the truth and the process of exporting oil from the Kurdistan Region is like previous months.”
Oil production cuts would further damage the Kurdistan Region’s oil-dependent economy which is in crisis because of low oil prices, suspension of budget payments from Baghdad, and lockdown measures taken to limit spread of the COVID-19 virus.
The government is unable to pay its civil servant on time and in full and has slashed each ministry’s share of the money to pay salaries by 21 percent. February paycheques are just being distributed now. The KRG warned it may reduce payments even further if it fails to collect enough money to pay March salaries.
The KRG has been trying to reduce its bloated public sector for years. Its long-debated reform law took effect on July 1 and will significantly slash salaries of the highest earners while eliminating double payments and ghost employees. The law is expected to return around $100 million monthly to the KRG treasury.
Auditing giant Deloitte said in May that the KRG sold crude oil and condensate worth more than $8.3 billion in 2019, up from 2018’s $7.75 billion.
Iraq angered its OPEC counterparts when it initially failed to meet the agreed reduced quota of 3.592 million bpd in May. Baghdad promised to compensate for the overproduction by making significant cuts in July, August, and September.
Iraq exported 2.816 million bpd in June, not including the Kurdistan Region. The country also consumed around 580,000 bpd domestically.
Hellenic Shipping News reported on Friday that Iraq will reduce its oil exports from its southern terminals, especially Basra Light flows, to implement the OPEC deal. Basra Lights will export around 1.53 million bpd in July, down from 3.1 million bpd in June.
Updated at 3:24 pm
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