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The oil policy is defended and BP Kirkuk deal is rejected by Iraqi Kurds

22 Jan 2013
KRG calls plan with BP for Kirkuk illegal Kurdistan and Baghdad has begun to truck oil to Turkey Iraq’s Kurdistan has defended its oil policy as constitutional, and rejected a contract between Baghdad and BP for an oilfield in the disputed city of Kurdistan, calling it an illegal step in the autonomous region’s feud with the central government. The statement came after Iraq’s oil minister said Baghdad’s government would take legal actions against the companies, who export the crude from Kurdistan, gave warning of cuts to the self-ruled region’s federal budget and declared an accord with BP in Kirkuk. Iraq’s Arab-led central government and Kurdistan Regional Government or KRG, run by ethnic Kurds, are locked in a widening dispute over control of oil profits, oilfields and territory that is fraying the country’s uneasy federal union. The ethnically mixed city of Kirkuk, sitting on the internal border between Kurdistan and Iraq, is at the heart of their long-running fight over constitutional rights to the OPEC member’s crude reserves, the world’s fourth-biggest. The citizens of Iraq are really tired of getting such threatening situations and intimidation, which in the cynical pursuit of narrow political agendas serves only for creating division and strife, the KRG expressed in a statement on its website. In terms of the oil and gas management, the KRG definitely has belief in, and abides by, the letter and spirit of Iraq’s permanent, federal constitution. Oil Minister Abdul Kareem Luaibi said on Wednesday (16th January, 2013) that Baghdad intends to sue Genel Energy – which is the first company to export oil directly from Kurdistan – and may cut the government allocated 17 % budget to the region unless it halts what he rejected as smuggling. It was declared by Luaibi that a preliminary deal with BP to revitalize the northern Kirkuk oil field, which apart from being at the centre of the battle between Kurdistan and Iraq is suffering massive production declines. He also reveals details of an illegal; and unconstitutional plan to supposedly allow BP for enhancing the recovery of some of the depleted field in Kirkuk without consulting and attaining approval of the other parties to the dispute, the KRG said. LONG-RUNNING FEUD The dispute between Baghdad and the Kurdistan enclave, which has run its own regional administration and armed forces since the year 1991, has escalated since the KRG began signing contracts with oil majors, such as; Exxon Mobil and Chevron. The government of Iraq demands only it has the constitutional authority of exporting crude oil and sign agreements, but Kurdistan says the constitution allows it to agree to contracts and ship oil autonomously of Baghdad. Kurdistan and Baghdad late last year both sent troops to support positions along their internal border in a major escalation of tensions between the two regions, but neither appeared to have the stomach for open conflict. The KRG has allowed Genel to truck exports directly from Kurdistan’s Taq Taq oilfield to Turkey, bypassing the federal pipeline system joining Kirkuk with the Turkish Mediterranean port of Ceyhan. While the central government dismisses that as smuggling, the KRG said the exchange with Turkey was making up part of Kurdistan’s right to 17 % of refined products since Baghdad was not supplying the full amount. The suggestion of Luaibi was rejected by the regional government as Luaibi suggested that Baghdad night cut Kurdistan’s 17 % share of the federal budget. The federal oil minister is stepping well beyond his remit in speaking about the federal budget, making yet another smokescreen for the incompetency of his ministry and of the federal administration, it said. The move of truck oil directly to Turkey came after Kurdistan exports were stopped via the Baghdad-controlled Iraq-Turkey pipeline because of a dispute over central government payments to oil companies, which are working in Kurdistan. Baghdad once paid in 2012, but the Iraqi officials said last month that they would not pay firms a second installment as Kurdistan had failed to reach agreed output under an agreement made in September. The central government says Kurdistan is predicted to provide 250,000 barrels per day (bpd) to Iraq’s 2013 oil export aim of 2.9 million barrel per day. The KRG was to contribute in the year 2012, around 175,000 bpd to the federal budget, but handed an average of 61,000 bpd, Luaibi stated. The KRG said that it had not been for the federal government’s obstructionist policies, the Kurdistan Region could now be exporting 500,000 barrels per day or some $ 18 billion per year. Source: [Reuters]
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