According to Reuters, the regional government of Kurdistan has threatened the government of Iraq with discontinuation of oil shipments from September 2012, because of the payments of the oil companies which are yet to be cleared. This is one of the longest running disputes between these two sides.
A senior official of the Kurdistan Regional government has confirmed on Tuesday that they are moving ahead with their plans of stopping the oil exports from September, because they are yet to receive any kind of confirmation that Baghdad is going to pay the oil companies which are working in this region presently.
The federal union of Iraq is facing a dire situation because of this long lasting dispute between the central government and the autonomous Kurdistan about having control over the oil fields of the northern region and about their internal border.
Baghdad has firmly stated that it has all the rights for exporting the crude oil of Iraq. Despite that fact Kurdistan has signed deals with major oil companies like chevron and Exxon and no the central government has braded those deals as illegal.
In the month of April, Kurdistan stopped the oil shipment saying the Baghdad hasn’t cleared the payments of the oil companies which are working in the region. Then it started the shipment from 7th of august on the condition that if the payments aren’t cleared soon it will gain stop the shipments from the next month.
According to the Iraqi government, the total amount of crude oil has been fluctuating after it has restored the shipment. During this time the amount of oil was between 100,000 to 120,000 bpd and it is way lower than the 175,000 bpd that Baghdad has originally agreed upon.
According to one of the senior officials of the Iraqi government has stated that the Kurdish government is yet to submit the receipts containing the expenses of the companies. A more meticulous audit is required before the payment can be made.
So far Iraq has approved about $560 million to the oil producing companies which are operating in the northern region in return of their cost of investment in order to develop oilfields in the Kurdistan region, despite that the officials are waiting for the go ahead sign.
Iraq’s deputy Finance Minister has said that the government has designated an amount of 650 billion Iraqi dinars (that is 559.4 million dollars) in the year 2012 in the budget for paying the companies and the amount will only be released if the government gives the order. The officials are yet to receive any order.
The crude oil produced in the Kurdistan region exported through the Kirkuk export stream and is sold to the world market through Ceyhan which is a Turkish Mediterranean port. The earlier amount of oil exported by the Kurdistan Regional Government has affected the Kirkuk shipments and reduced the amount of the oil below 300,000 bpd.
According to the interim agreement signed in the January of 2011, Baghdad has approved the payment for the companies working the Kurdistan region for their exploration and extraction cost.
That specific agreement has assigned the Kurdistan authority to supply 175,000 bpd of crude oil to Baghdad and it was said that 50% of the money will be paid back to Kurdistan for covering the production cost of the companies.
According to Kurdistan, it has received two payments so far, and the total amount of payment was 514 million dollars and the last of the payments was made way back in May of the year 2012.