Iraqi oil minister started negotiations process with Kurdish leaders

Iraq’s top oil official met with Kurdish leaders in Erbil today as the Kurdistan Region pushes for control over hydrocarbon exports and revenue.
Adil Abdul-Mahdi, the newly appointed Iraqi minister of oil, met Kurdistan Regional Government (KRG) Prime Minister Nechervan Barzani and Deputy Prime Minister Qubad Talabani in a closed-door meeting in Erbil on Thursday. This is Abdul-Mahdi’s first visit to Erbil since assuming office.
Kurdish officials were heartened by Abdul-Mahdi’s appointment in September because of his past close ties with the Kurds.  The former vice president replaced Hussein al-Sharhistani, who had fiercely opposed Kurdistan’s independent oil ambitions. Earlier this week, Barzani said the federal government must export oil from the disputed Kirkuk area – whose large oil fields are now under KRG, not federal, control – through the Kurdistan region.
“We wish to settle all outstanding issues with Baghdad,” he said. “However, if we do not reach agreement, the Kurdistan Regional Government has other solutions.” He reiterated that his government was seeking greater economic independence in line with its constitutional rights, and that it must protect itself from political blackmail by securing an independent revenue stream.
Former Prime Minister Nouri al-Maliki had signed an order to cease budget transfers in January in response to the completion of a new Kurdistan Region-Turkey pipeline, which has allowed the semi-autonomous region to dramatically increase its oil exports.
“When the Iraqi Government stopped the Kurdistan Region’s budget, we were not exporting oil and their decision was unilateral,” Barzani said. “The Kurdistan Region seeks a mechanism where such situations would not reoccur.”
He forecast the region could earn its full 17 percent share of Iraq’s national revenue by the end of next year, and that it could reach the 11 percent share it had been receiving – slightly more than a billion dollars a month – by March.
Kurdish officials project they can reach these targets because of improvements to the export pipeline through Turkey, increases in oil production, and the addition of oil from four Kirkuk fields formerly operated by Iraqi state-owned North Oil Company (NOC).  Iraq Oil Report said the KRG was blending and exporting approximately 138,000 barrels per day from former NOC fields after taking control of them in July.
The government urgently needs to secure income in the absence of federal budget transfers, as it has paid out of pocket for the region’s vast number of civil servants, whose salaries consume roughly 75 percent of the KRG’s budget.  Deputy Prime Minister Qubad Talabani announced earlier this week that legislation has been put to the region’s parliament authorizing the government to assume international debt, and that he had visited the UK and United Arab Emirates to seek loans.
While he suggested this money would be used for strategic investment and not salaries, such loans would relieve the considerable burden currently placed on the KRG, which has almost no tax base and relies considerably upon oil export revenues.
Several parallel issues have been linked to reaching an oil deal. Barzani explained that the region has received 11 percent and not 17 percent of the national income in the past because the government first deducted national expenses; yet the government does not fund the Peshmerga, which serves as a national defense force.
If Baghdad refuses to pay the Peshmerga under a new national defense bill, lawmakers have indicated they will keep the full 17 percent.