Talk Of Renewed Kurdish Oil Exports

From June to October 2009, the Kurdistan Regional Government (KRG) was allowed to export oil from its Tawke and Taq Taq fields. The KRG began exporting between 40,000-60,000 barrels of petroleum a day in what was hailed as a breakthrough between the Kurds and the central government that had argued over the legitimacy of the region’s oil contracts. The problem was that while the profits from the sales were deposited in accounts in Baghdad, the government did not agree to pay the companies. By October, the businesses announced that they would stop their work since they were not receiving any compensation. Baghdad emerged with all of the profits and no costs, while the KRG came out with nothing.

Afterward the KRG went back to its usual war of words with the central government over the petroleum industry. In November 2009 for example, KRG President Massoud Barzani claimed that because the Oil Ministry had failed to develop the energy resources of Iraq, the KRG didn’t have to follow its rules, and that the Kurds would keep any money they earned from their oil. In December, the KRG Natural Resource Minister criticized the second bidding round on oil fields before they began that month, and demanded that the Kurds be included in any negotiations over energy deposits in disputed territories.

In January 2010 the rhetoric suddenly became conciliatory. That began when Prime Minister Nouri al-Maliki issued a statement on January 3 that the two sides should talk about oil contracts. He said that he had discussed the deals with KRG Prime Minister Barham Saleh. On January 18 the KRG said that it would be willing to meet with Baghdad to resolve their outstanding issues over the energy sector. As a concession the Kurds said that they would publish the deals they made with foreign companies that exported oil in 2009, which Baghdad has always complained were not transparent and lacked details on. In return, the KRG Natural Resource Minister wanted to resume exports. As before, the sticking point was how to pay the companies exporting in Kurdistan. The Resource Minister said that Baghdad should pay the companies to cover their costs, and promised a large increase in export revenue, which the central government could share in as their return. Those profits would be deposited in Baghdad again as during 2009.

There is no guarantee that this issue will go beyond talk. The new oil deals that Baghdad signed in December 2009 offer much larger exports and profits for the Oil Ministry, which lessons the need for Kurdish exports that the government has protested. The statements by the two sides could also be part of election year politicking as the Kurds will be an important bloc in parliament to form any new government. Any substantial moves over Kurdish exports then, will likely not occur until late in the year after the March elections and a new ruling coalition is put together.

SOURCES

AK News, “Iraq’s oil and gas assets are shared: Barzani,” 11/11/09

Hafidh, Hassan, “DNO Shares Rise As Iraq Kurds Aim To End Oil Row With Baghdad,” Dow Jones, 1/18/10

Al-Hindawi, Fawzi, “Iraqi Kurds accept most government conditions for exporting their oil,” Azzaman, 1/19/10

Ryan, Missy, “Iraq’s Maliki calls for end to Kurd oil deal row,” Reuters, 1/3/10

Ward, Andrew and MacNamara, William, “Kurdish minister pushes for Iraqi oil deal,” Financial Times, 1/18/10

Yackley, Ayla Jean, “UPDATE 2-Kurds say Iraqi oilfield auction is being rushed,” Reuters, 12/10/09