Are The Kurds Going To Export Oil Again?

Kurdish Pres. Barzani (left) and Premier Maliki (right) may be moving towards reconciliation over oil (Xinhua)

Iraq’s Oil Minister Abdul Karim Luaibi is making waves just days into his new job. Recently, while attending the Organization of Arab Petroleum Exporting Countries meeting in Cairo, Egypt, the minister told the press that a deal had been cut between the Kurdistan Regional Government (KRG) and Baghdad over oil. If true, this could have wide ranging impact over not only Iraq’s natural resources, but relations between the central and regional governments and the 2011 budget.

On December 24, 2010 Oil Minister Luaibi told the press that an agreement had been reached over Kurdish oil exports and contracts. He said that not only would the KRG begin to sell its petroleum overseas once again, but that the Kurds' oil contracts would be recognized, and that the foreign companies would be paid for their operation costs in Kurdistan. In return, the Kurds would only ship their oil through the northern pipeline to Turkey, and that all the revenues would go to the central government’s coffers in Baghdad. Former Oil Minister Hussein Shahristani had declared all of the Kurds’ oil deals illegal because they didn’t go through the Oil Ministry, and had allowed the Kurds to export for just a few months in 2009, but refused to compensate the corporations involved. 

Concessions on the KRG’s oil policy was part of the power sharing agreement that put Prime Minister Nouri al-Maliki back in power. Just before Maliki took the stage at parliament to have his new cabinet confirmed on December 21, he signed onto the Kurds’ 19 demands. Those included a revenue sharing and oil laws by next year, and recognition of their petroleum contracts. 

Even before that happened the Oil and Finance Ministries were working towards some kind of understanding with the KRG. In November the government announced that the 2011 budget would include 150,000 barrels a day in Kurdish exports, which would determine whether the Kurds got their 17.5% of national funds. The KRG’s Natural Resource Ministry complained about this, saying that their oil deals needed to be confirmed first. Then on December 18, Kurdish lawmakers walked out of parliament saying that the proposed budget would put them in a legal bind if the oil issues were not worked out first. They threatened to hold up passage of the spending bill until this problem was resolved.

Premier Maliki’s signing of the Kurdish demands and the Oil Minister’s announcement could be signs that the differences between the two sides have been worked out. If true, that could be a major achievement for the new government, as the former Maliki administration was marked by increasing tensions between Baghdad and Irbil, with oil being a major point of contention. At the same time, the details need to be discussed over exports and contracts, and then made public before any statement by an Iraqi politician can be taken seriously. Kurdish oil sales will only be a small fraction of Iraq’s totals, but they can be a huge step towards reconciliation between the central and regional governments.

SOURCES

Abdul-Rahman, Mohammed, “Shahrestani unauthorized to order Kurdistan currently, says source,” AK News, 12/1/10

Ali, Yaser, “KBC: Maliki signs agreement to Kurdish conditions,” AK News, 12/21/10

Aswat al-Iraq, “Govt. sets barrel price at $73 in 2011 budget,” 11/20/11
- “Iraq’s Kurdistan ready to export oil according to Baghdad govt.’s export level, official,” 12/20/10

Carlisle, Tamsin and al Sayegh, Hadeel, “Iraq gives go-ahead to Kurdish oil contracts,” The National, 12/26/10

Dow Jones, “Iraq Oil Minister: Kurdish Agreement ‘Activated’ In Days,” 12/24/10
- “Iraqi: KRG To Face Penalties If Oil Exports Fail To Hit Target,” 11/29/10

Lando, Ben, “Kurdish oil demands to Maliki revealed,” Iraq Oil Report, 12/15/10

Said, Summer, “2nd UPDATE: Iraq Oil Min: Ctrl Govt To Recognize Oil Deals Inked By Kurdistan,” Dow Jones, 12/25/10