Iraqi Kurdistan and federal Iraq have agreed that the northern region will sell 250,000 barrles of oil a day (b/d) via the State Organisation for Marketing of Oil (Somo) as part of the 2020 budget deal, according to the state-owned Iraqi News Agency.

Currently, the Kurdistan Regional Government (KRG) exports around 400,000 to 500,000 b/d.

Iraq’s 2020 federal budget is currently under discussion in parliament.

The Kurdistan Regional Government (KRG) was required to supply 250,000 b/d of oil to Somo in order to get its allotted 7 per cent of the budget under the 2019 federal budget law, however both sides said that the other failed to keep to the deal and the transfers never took place.

The KRG has not received its share of the state budget since 2014, when it began exporting oil independently of Baghdad.

It is uncertain whether the oil transfer deal for the 2020 budget will take place.

Kurdish officials have said they will wait until the Prime Minister-designate Mohammed Tawfiq Allawi forms a new government before starting to transfer oil revenues to national state company SOMO as agreed, INA said.

The 2019 budget, which included Kurdistan region’s contribution, was forecast at 133 trillion dinars ($112 billion) based on oil exports of 3.88 million barrels per day at a price of $56 per barrel.

The 2019 budget also included payment of salaries for the Peshmerga, the military force for the semi-autonomous Kurdish region, a move that helped ease tension between Baghdad and Erbil.