Iraqi gov’t, Kurds to start talks on oil dispute

The statement was published after a meeting in Baghdad between Iraqi Prime Minister Haider al-Abadi and Nechirvan Barzani, prime minister of the Kurdistan Regional Government (KRG). 

Iraq’s oil ministry said on Aug. 26 it would consider selling crude through Iran should talks with the autonomous Kurds about oil exported by pipeline through their region from the northern Kirkuk fields to Turkey fail.

“The meeting dealt with issues related to oil production and distribution from the field of Kirkuk and the region” of Kurdistan, the statement said. 

“It was agreed to start technical talks” between the oil ministries of the two sides.

Iraq, OPEC’s second-largest producer after Saudi Arabia, depends on oil sales for 95 percent of its public income. Its economy is reeling under the double impact of low oil prices and the war against Islamic State of Iraq and the Levant (ISIL) militants.

The KRG region produces around 500,000 barrels per day (bpd) on its territory and exports those volumes via Turkey. Baghdad would not be able to re-route those volumes to Iran but could order shipments of some 150,000 bpd via Iran that are being produced in the nearby province of Kirkuk.

Iraq’s state-run North Oil Company resumed pumping crude through the Kurdish-controlled pipeline to Turkey earlier this month as “a sign of goodwill” to invite the Kurds to start negotiations, Deputy Oil Minister Fayadh al-Nema said in an interview with Reuters on Aug. 26.

But the flow of crude extracted from Kirkuk by North Oil and pumped in the pipeline has been running at about 75,000 bpd since, or half the rate before it was halted in March, he said. It would only be increased if there is an agreement, he added.

The pipeline carries crude to the Mediterranean port of Ceyhan, where the Kurds have been selling it independently on the international market, along with oil produced in their northern region.

The KRG cabinet has been calling on Baghdad since March to resume the pumping of Kirkuk crude in full to help Arbil fund its war against ISIL.