Baghdad makes $455 million budget payment to Kurds for March

BAGHDAD-Reuters

Iraqi workers stand near a pipeline as it ejects oil at Al Tuba oil field in Basra. REUTERS Photo

Baghdad cut the budget payments in January 2014 over the semi-autonomous region’s plans to export its oil through Turkey but reinstated them in December after the Kurds agreed to export an average of 550,000 barrels per day (bpd) from Ceyhan via Iraq’s State Oil Marketing Organization (SOMO) in 2015.

The agreement aimed to help Iraq increase oil exports at a time when revenues are strained by low global prices and the cost of fighting Islamic State insurgents who seized control of large areas in the north and west last summer.

“Both sides are committed to implementing the agreement in good faith,” Finance Minister Hoshyar Zebari told Reuters.

Zebari, a Kurd, added that the payments had come in for the past five months. Iraq made its last payment to the Kurds for February on March 19.

The semi-autonomous Kurdish region was promised 17 percent from this year’s $105 billion national budget, which averages out to a monthly payment of $1 billion.

So far, neither side has been able to reach its immediate targets. The central government has severe cash flow problems, burdened by low oil prices and the war against Islamic State.

The Kurds have struggled to reach the export target of 550,000 barrels per day from their fields and from national fields in Kirkuk they are now responsible for exporting from.

Total Kurdish oil exports have now reached an average of 300,000 barrels per day, according to Zebari.
Both sides have displayed “a steady, insistent commitment” to honoring their deal, he said.