ERBIL, Kurdistan Region - The Iraqi Kurds are within sight of economic if not political independence with oil exports expected to rise to 500,000 barrels a day by early next year, Ashti Hawrami, minister of natural resources in the Kurdish Regional Government, said on Thursday.
He said not even the sweep of Islamic State forces across northern Iraq since June had been able to prevent the flow of Kurdish oil, which had “increased by 60 per cent since the first bullets were fired.”
“We have sold 20 million barrels of oil. We’ve got paid for that,” he said on the final day of the Middle East Research Institute’s forum on regional affairs being held in Erbil. “There’s more demand than we can supply and there’s no stranded oil,”
Baghdad has claimed that Kurdish oil shipments that started in May via a pipeline to Ceyhan in Turkey are illegal and it launched legal action against the Kurdish Regional Government (KRG) in the US.
Several tankers carrying Kurdish oil were reported to be “stranded” around the world with no buyers but the KRG has insisted it has sold all its exports.
Hawrami said sometimes the oil was sold at the international price and “sometimes it’s cheaper.”
A KRG official told Rudaw last week that the discount offered on Kurdish crude was only a modest $8 discount. Brent crude, an international benchmark, is currently trading at around $83. Heavier crude from Kurdistan would attract a lower price, even without the discount.
The KRG has been tight-lipped about its oil deals because of their commercial sensitivity. But it also is involved in a dispute with Baghdad, which has withheld the KRG’s 17 per cent share of budgetary revenues for several months.
The KRG did not advertise who was buying Kurdish crude because “we don’t want our friend SOMO chasing them through the international courts,” Hawrami said, referring to the Iraqi state marketing company.
The KRG was using the same processes and paperwork as SOMO and it would prefer to export oil in partnership with Baghdad rather than in defiance of the national capital, Hawrami said.
Since the KRG passed its investment law in 2006, the region had become almost self-sufficient in power generation, in fuel supply including jet fuel, and had laid the groundwork for financial independence, he said.
Federalism had failed in Iraq and the country should consider confederation, under which political units such as the KRG would have greater autonomy than at present, he said.
Bayan Jabir Al Zubaidi, the Iraqi minister of transportation, told the same panel that Baghdad was committed to finding a solution to the many disputes it has with Erbil.
He said Baghdad was almost broke following mismanagement by the previous government led by Nouri Al Maliki. Iraq needed all the revenues it could get so it would be preferable to reach an agreement with Erbil, he said.
Baghdad was also losing revenue because of illegal oil sales by ISIS, he said. “Everybody in Iraq is suffering. Everyone is losing 600,000 barrels of oil because of various issues such as illegal sales,” he said.
Zubaidi, who is a former commander of the Shia military Badr Brigades, even suggested connecting Kirkuk to the KRG pipeline to enable exports.
Kurdish Peshmerga moved into Kirkuk and other areas the KRG claims as its own when the Iraqi army fled the ISIS offensive in June. The KRG concedes that the final status of Kirkuk, which has a mixed community that includes Kurds, Arabs and Turkomans, will be decided in a referendum.
“Why don’t we link Kirkuk with the KRG pipeline and export it through KRG?” Zubaidi said. “Both [Baghdad and Erbil] will benefit and $1million worth of Kirkuk oil can be exported a day. I shouldn’t have said that but I decided to speak frankly.”
Qubad Talabani, deputy KRG prime minister, told the panel that Kurdish oil sales would help Baghdad in its budget crunch. “We can use oil sales for budget expenditures instead of going back to Baghdad for the money,” he said. “So this is a solution but the solution needs an agreement with Baghdad.”
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