Baghdad and Erbil settle oil dispute

18 September 2012

Kurdish oil exports to continue following agreement to end dispute

Iraq’s federal government and the semi-autonomous Kurdish authorities have agreed to end a dispute over oil payments after Baghdad agreed to pay $1.5bn to oil companies working in the northern region.

As part of the deal, the Kurdistan Regional Government (KRG) has also agreed to continue oil exports through Iraq’s northern pipeline to Turkey. The KRG had previously threatened to cut off its exports due to the dispute which began in March.

The agreement was announced by Rosh Nuri al-Shawish, Iraq’s deputy prime minister on 14 September.

The KRG has now pledged to increase exports from its fields to 200,000 barrels a day (b/d), up from about 120,000 b/d currently. It is unclear when the increased volumes will begin.

Kurdish exports were initially stopped in April in protest at Baghdad’s refusal to pay three oil firms that had been suppling crude to the export pipeline: UK-Turkish joint venture Genel Energy; Norway’s DNO; and the Erbil-based KAR Group.

The KRG has no independent export pipeline routes of its own, so its crude is transported through the federally controlled Iraq-Turkey pipeline. Despite the agreement, there is still no movement on the passing of a long-delayed oil and gas law in parliament, which would govern how the federal and regional authorities manage their oil and gas resources.

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