Arbil warns Baghdad it may sell oil ‘on its own’

ARBIL – Anadolu Agency

The speaker of the Parliament of Iraq's autonomous Kurdish region, Yossef Mohammed speaks during a joint press conference with Kurdistan's Prime Minister (unseen) about oil agreements on May 14, 2015 in Arbil, the capital of the autonomous Kurdish region of northern Iraq. AFP Photo

The regional Kurdish government in Arbil has the right to sell its own oil if Baghdad does not uphold its part of an oil agreement, the Iraqi Kurdish administration’s parliament speaker said May 30.

Speaker Yusif Muhammad Sadiq said the Kurdistan Regional Government (KRG) had alternatives if the central government continued to avoid dispersing the share of the regional government from the federal budget.

“We prioritize our relations with Baghdad and maintain our loyalty to the mutual agreement. However, we have the legal right to sell our oil independently without consent from the central government, if they do not distribute our share from the budget and do not honor the agreement,” Sadiq said.

The Iraqi Kurdish administration and the central government reached an oil agreement on Dec. 2, 2014, according to which Erbil could export oil in exchange for a share in Baghdad’s budget.

The agreement specified that the Iraqi Kurdish administration would export 250,000 barrels of oil per day, with the Kirkuk province providing 300,000 barrels per day under the supervision of central government’s oil marketing company, SOMO. In return, Baghdad was to provide 17 percent of the national budget to the Kurdish regional government.

Sadiq said the regional government had responsibilities to its citizens and could resort to not only selling oil independently but also signing free trade deals.

Crude oil output for the Organization of the Petroleum Exporting Countries’ second largest producer rose to a total of 3.8 million barrels a day in April, a new record high since 1979, while its oil exports reached 3.1 million barrels per day, according to the monthly oil market report of the International Energy Agency (IEA) in early May.

The KRG increased its oil exports to the Turkish port of Ceyhan to 650,000 barrels a day in May from 450,000 barrels, according to the Turkish Energy Ministry.

The regional government exports its crude to Turkey’s southern port in Ceyhan in the eastern Mediterranean, where oil is then sent to international markets.

According to regional government officials, Arbil has received a total of $1.5 billion in the last three months.

There have been numerous disputes between Erbil and Baghdad due to 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.