Iraq’s central government has approved the payment of about $560m to the Kurdistan Regional Government (KRG) to pay for the costs of oil production after Kurdish authorities threatened to halt exports.

The payment is part of the 2012 budget which will be dispersed after being signed off by the independent Board of Supreme Audit (BSA), according to Finance Minister Rafi al-Essawi, who was speaking to reporters on the sidelines of the Arab League summit in Baghdad, Reuters news agency reports.

There was no indication when the BSA would sign off on the budget.

According to Reuters, Deputy Finance Minister Fadhil Nabi added that a total of about $2.53bn had been allocated to pay international oil companies working in Iraq, including $560m for oil producers in the Kurdish region.

The Iraq approved a $100 billion budget for 2012 in February, based on an average oil price of $85 a barrel and crude exports of 2.6 million barrels a day (b/d). It includes exports of 175,000 b/d from the Kurdish region.

However, the KRG released a second statement on 26 March saying it has reduced its exports to 50,000 b/d from an estimated 90,000 b/d and threatened to terminate crude oil exports within a month if Baghdad continues to withhold payment from the producing companies.

The KRG says it is owed close to $1.5bn, but only two payments, totalling $514m, have been made, the last of which was received in May 2011.

> Iraq crude oil export and revenue data