Kurdish cabinet approves measures to strengthen hand on oil
ERBIL – The Kurdistan Regional Government (KRG) is moving forward with legislation to further reduce its ties with Baghdad, as the cabinet put two oil and gas laws forward for parliamentary approval next week, KRG officials said.
The cabinet approved a bill at its session on Wednesday that would create a special account consolidating the region’s various sources of oil revenue to provide transparency.
A second bill would create a publicly-owned company to sign contracts for discovery, production, development, marketing and export.
Parliament is expected to vote on the measure after the energy committee convenes on Monday.
The regional government’s website explains that the proposed regional company would be publically owned - offering Kurds a chance to buy shares - and would be involved in all phases of oil production, development, marketing, and exporting.
A source close to the parliamentary energy committee told Rudaw that it would be easy to create the account for oil revenues, but the creation of a public oil company was likely to be years in the making because of the complexity and cost of setting it up.
The step came a day after the governor of Kirkuk, Najmaldin Karim, met Turkish Prime Minister Ahmet Davutoglu to discuss oil exports to Turkey from areas claimed both by Baghdad and Erbil. Karim met KRG Prime Minister Nechervan Barzani before heading to Ankara for the meeting.
Iraq Oil Report reports that the KRG is pumping 120,000 barrels a day from two major fields in the disputed oil-rich Kirkuk region - Kirkuk and Bai Hassan - and that much of this is being exported to Turkey.
The Ministry of Natural Resources told Rudaw in the past that much of this oil was being used by the KRG for its domestic refineries, helping the region to maintain its supply of refined products after Islamic State militants disrupted the activity of the Baiji refinery in June. The loss of Iraq’s largest refinery in June caused shortages of electricity and refined oil products, such as gasoline.
The Ministry of Natural Resources also stated that production in Kirkuk’s Avana dome and Bai Hassan fields will free up oil from its Khurmala dome for export.
The use of Kirkuk oil complicates ongoing negotiations over control of the country’s oil exports, the focus of a bitter dispute between Erbil and Baghdad that led former Prime Minister Nouri al-Maliki to cut off the region’s budget - over one billion dollars a month - in January.
The Wall Street Journal quoted an executive from oil and gas giant BP as saying that it continues to help Iraqi state-owned North Oil Company in efforts to increase field output volume in Kirkuk, despite the fact Kurdish Peshmerga took control of two NOC-operated fields in July.
Many Kurds see Kirkuk’s oil wealth as a critical component of economic independence, weaning the region off budget transfers from Baghdad and creating a de facto confederation in Iraq.
Muhammad Haji Mahmoud, commander of Peshmerga in Kirkuk, told local media in Dohuk on Wednesday that he believes the creation of a confederation in the country, rather than a budget deal, is the answer for Erbil’s fraught relationship with Baghdad.
Analysts see a budget deal as increasingly unlikely. Baghdad would be unable to pay back $10.3 billion dollars it owes the Kurdistan Region in the short term, and there appears little political will to do so.
The cabinet approved a bill at its session on Wednesday that would create a special account consolidating the region’s various sources of oil revenue to provide transparency.
A second bill would create a publicly-owned company to sign contracts for discovery, production, development, marketing and export.
Parliament is expected to vote on the measure after the energy committee convenes on Monday.
The regional government’s website explains that the proposed regional company would be publically owned - offering Kurds a chance to buy shares - and would be involved in all phases of oil production, development, marketing, and exporting.
A source close to the parliamentary energy committee told Rudaw that it would be easy to create the account for oil revenues, but the creation of a public oil company was likely to be years in the making because of the complexity and cost of setting it up.
The step came a day after the governor of Kirkuk, Najmaldin Karim, met Turkish Prime Minister Ahmet Davutoglu to discuss oil exports to Turkey from areas claimed both by Baghdad and Erbil. Karim met KRG Prime Minister Nechervan Barzani before heading to Ankara for the meeting.
Iraq Oil Report reports that the KRG is pumping 120,000 barrels a day from two major fields in the disputed oil-rich Kirkuk region - Kirkuk and Bai Hassan - and that much of this is being exported to Turkey.
The Ministry of Natural Resources told Rudaw in the past that much of this oil was being used by the KRG for its domestic refineries, helping the region to maintain its supply of refined products after Islamic State militants disrupted the activity of the Baiji refinery in June. The loss of Iraq’s largest refinery in June caused shortages of electricity and refined oil products, such as gasoline.
The Ministry of Natural Resources also stated that production in Kirkuk’s Avana dome and Bai Hassan fields will free up oil from its Khurmala dome for export.
The use of Kirkuk oil complicates ongoing negotiations over control of the country’s oil exports, the focus of a bitter dispute between Erbil and Baghdad that led former Prime Minister Nouri al-Maliki to cut off the region’s budget - over one billion dollars a month - in January.
The Wall Street Journal quoted an executive from oil and gas giant BP as saying that it continues to help Iraqi state-owned North Oil Company in efforts to increase field output volume in Kirkuk, despite the fact Kurdish Peshmerga took control of two NOC-operated fields in July.
Many Kurds see Kirkuk’s oil wealth as a critical component of economic independence, weaning the region off budget transfers from Baghdad and creating a de facto confederation in Iraq.
Muhammad Haji Mahmoud, commander of Peshmerga in Kirkuk, told local media in Dohuk on Wednesday that he believes the creation of a confederation in the country, rather than a budget deal, is the answer for Erbil’s fraught relationship with Baghdad.
Analysts see a budget deal as increasingly unlikely. Baghdad would be unable to pay back $10.3 billion dollars it owes the Kurdistan Region in the short term, and there appears little political will to do so.