Iraq appoints new oil minister in cabinet overhaul

16 August 2016

Al-Luaibi says Baghdad can find a solution to oil conflict with Kurdistan Regional Government

Iraq has appointed Jabar Ali al-Luaibi, the former head of the country’s state oil firm, as its oil minister in a cabinet overhaul.

Al-Luaibi had led the South Oil Company, which produces most of the crude for Iraq, Opec’s second-largest producer after Saudi Arabia. He was one of five new ministers who received parliament’s approval to begin their new role, which will bolster Prime Minister Haider al-Abadi’s leadership.

The vote eases political tensions that rose in February over anti-graft reforms sought by Al-Abadi, and consolidates his position ahead of a battle planned for later this year to recapture Mosul, the largest city under the control of Islamic militants.

The premier announced in February his intention to overhaul the cabinet by appointing independent technocrats as ministers to loosen a political patronage system that breeds graft.

In his first comments after taking office, the new oil minister said Baghdad could find a solution to the oil conflict with the Kurdish region of northern Iraq.

“There are solutions to the existing problems between the federal government and the Kurdistan Regional Government about the oil file,” he was quoted by news agency Reuters as telling a local TV channel.

The conflict centres on the Kurdish region’s crude exports, which Baghdad wants to bring under its control.

Iraq produces about 4.6 million barrels a day (b/d) of oil, most of it from the southern region overseen by South Oil Company. 

Kurdistan has an export target of about 500,000 b/d. The KRG has been selling crude independently from the central Baghdad government since talks broke down, with the Kurds claiming they were not receiving budget payments.

Crude exports dropped by 8.5 per cent in July to an average of 457,314 b/d. The autonomous region, which exported an average of 499,908 b/d in June, is significantly below its targeted 500,000 b/d. 

Production was halted at Bai Hassan in Kirkuk after the jihadist group Islamic State in Iraq and Syria (Isis) attacked facilities on 31 July, killing five people. Production at the field is estimated to represent about a third of KRG exports.

Crude was sold at an average of $32.53 a barrel, with the KRG reporting a gross value of sold crude of $461.2m for the month. The value of oil sold in June was reported at $562m.

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