Iraq and Kurdistan Region of Iraq reach tentative agreement on oil firm payments

pipeline iraq-kevin abbot sxc optKurdistan Region of Iraq will resume oil exports of nearly 250,000 bpd via the Baghdad-controlled export pipeline. (Image source: Kevin Abbot/sxc.hu)Iraq’s federal government and the Kurdistan Region of Iraq have reached a tentative agreement to resolve disputes over payments to foreign companies that have affected crude oil exports from the autonomous region

The deal was reached during a meeting between Iraq Prime Minister Nouri al-Maliki and the Kurdistan Regional Government (KRG) premier Nechirvan Barzani, officials said.

If the agreement comes into effect, the Kurdistan Region of Iraq will resume oil exports of nearly 250,000 bpd via the Baghdad-controlled export pipeline, potentially raising Iraq’s oil exports to nearly 2.9mn bpd, from around 2.55mn bpd.

Ali Hussein Bellu, an advisor to the Kurdistan Region of Iraq's Oil Ministry said, “Following the new agreement this week, perhaps the central government will not pay that entire amount of US$3.5bn to foreign oil firms, but they may reach a compromise with the companies.”

Bellu also said that the payment could be made when the KRG and Iraqi Parliament discuss  additional budget for 2013 next month.

Ali al-Mawsawi, al-Maliki’s spokesperson, said, “The two sides have agreed to find a solution to payments to oil companies in Kurdistan Region of Iraq.”

Baghdad and Erbil have been at loggerheads over scores of oil contracts that the KRG signed with international oil companies. Baghdad said these deals were invalid because they have not been approved by the federal government, while the Kurdistan Region of Iraq argues that they are in line with the new Iraqi Constitution.

In December last year, the KRG suspended crude oil exports through the Baghdad-controlled pipeline over the issue of the lack of payments of oil export revenues collected by the federal government, which it failed to give to oil companies operating in the autonomous region.

Meanwhile, among the other issues agreed by the two sides was the acceleration of the process to enact a long-awaited draft oil and gas law.

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