The semi-autonomous Kurdistan Regional Government (KRG) has blasted the signing of a development agreement for the disputed Kirkuk oil field between Baghdad and UK oil major BP and has again threatened to cut off the region’s oil exports.
“Neither Iraq’s federal Oil Ministry nor state-owned oil companies have the right to unilaterally award contracts to develop currently producing fields in Kirkuk province or in other adjacent areas”, the KRG’s Ministry of Natural Resources said in 26 March statement.
The KRG cites Article 112 of the Iraqi constitution, signed in 2005 which states that “federal government and the regional and producing governorates shall together manage the present producing oil fields.”
The comments follow reports that the state-owned North Oil Company had signed a preliminary agreement with BP to increase production at the Kirkuk field to 580,000 barrels a day (b/d) from about 280,000 b/d currently.
While the KRG “welcomes the experience and technical expertise that international oil companies can bring”, it has not been consulted on the matter.
The Kirkuk field is not the only matter of dispute between the federal and regional governments. The KRG released a second statement on 26 March saying it has reduced its oil exports to 50,000 b/d from an estimated 90,000 b/d. It also threatened to terminate exports within a month if Baghdad continues to withhold payment from the producing companies.
According to the 2012 budget, the KRG is required to export 175,000 b/d. Baghdad agreed in early-2011 to pay the KRG 50 per cent of the region’s export revenues to pay their contractors. So far, only two payments, totalling $514m have been made. The last was received May 2011 and the KRG now says it is owed close to $1.5bn.