KRG not to deliver oil to Baghdad unless it receives commitment for payments: official

Published 02.06.2015 15:05

If the Kurdish Regional Government (KRG) does not receive a commitment from Baghdad for oil sales payments by June 15, it won't continue to deliver oil to Iraqi National Company responsible for marketing Iraq's oil, called State Organization for Marketing of Oil (SOMO), the deputy head of the oil and gas committee in the KRG parliament, Dilshad Shaban, told Anadolu Agency on Tuesday.

According to an agreement reached on December 2 between Erbil and Baghdad, the Kurdish government was to export 250,000 barrels of oil per day, and the Kirkuk province 300,000 barrels per day via SOMO. And in return, Baghdad was to provide 17 percent of the national budget to the regional government. But Baghdad has made only a small part of the payments due.

The result is a financial crisis in the region, Shaban said, in which the regional government (KRG) cannot pay for public services.
Shaban said that international companies provide a ready market for Erbil's oil. He said, the KRG awaits an answer from Baghdad, and respecting the agreement, does not sell oil on international markets.

"The KRG could export 650 thousand barrels of oil per day and earn $900 million. We could then pay civil servants' salaries," Shaban said.

"If the Iraqi government doesn't send an official answer by June 15, the KRG won't deliver any more oil to SOMO in Baghdad. In that case, we will sell our oil on our own to the global market," he added.

Should Baghdad violate the agreement, there will be economic repercussions, according to Shaban. "Without the KRG's help, Baghdad can't sell Kirkuk oil. The KRG will sell Kirkuk's oil to others," he said.

There have been numerous disputes between Erbil and Baghdad about the amount of crude oil being exported. While Erbil accuses the central government of failing to provide its full share from the national budget, Baghdad claims the Kurdish regional government has not delivered on its promised amount of crude oil from Kirkuk.

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