Report: KRG extends oil export initiative

KRG pitches goodwill initiative as completion of Turkey pipeline nears

If Baghdad does not make oil payments by 15 September the KRG says it will suspend exports again. GETTY IMAGES
If Baghdad does not make oil payments by 15 September the KRG says it will suspend exports again. GETTY IMAGES

The Kurdish regional government will continue to pump oil through the central government’s Kirkuk pipeline until 15 September, according to a Reuters report.

"We decided to extend the deadline for pumping crude to [15 September] as a goodwill gesture, and to give Baghdad more time to resolve the payment issue," one source with Kurdistan's natural resources ministry told Reuters.

According to an official statement from the KRG, the initiative is "aimed at solving once and for all the ongoing oil and gas issues in Iraq." If Baghdad does make all the outstanding payments due to oil companies operating in the region ansd commits to implementing a series of measures the KRG says it has previously agreed, exports will be halted.

The Kurdish regional government resumed oil exports via the central government Kirkuk pipeline to Turkey on 7 August. Natural resources minister Ashti Hawrami dubbed a “goodwill initiative” aimed at resolving a running dispute which has taken Kurdish crude off Iraq's oil export slate, put the Kurdish region's federal budget allocation under threat, and pushed oil companies operating in the Kurdish region to sell crude locally at cheap rates.

The move coincides with the formation of a new Parliamentary committee in Baghdad dedicated to generating consensus on oil and gas legislation, the want of which is at the heart of the political crisis over oil between Baghdad and Erbil.

The central government has allocated almost $560 million to repay the capital expenditure of oil companies working in the Kurdish region, but will not release the money unless the KRG resumes the flow of oil expected of it under the federal budget and the companies claiming the money are audited.

Deputy Prime Minister for Energy Hussein Al-Sharistani has also suggested that the region should pump additional crude to compensate for oil revenue lost to the government for the KRG-mandated shut-in which ran from April to early August.

The Kurdish regional government is far from relying on a resolution to its oil policy dispute with Baghdad, and has raced ahead with the construction of a million barrel a day pipeline to the Turkish border, according to Iraq Oil Report. While the region’s relations with Turkey have developed rapidly, no export agreement has yet been announced.

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