News / Iraq

Iraq, Kurdistan resume exporting oil from Kirkuk: Sources

Thursday, 01 September 2016 5:34 PM [ Last Update: Friday, 02 September 2016 2:39 AM ]

The file photo shows fires flaring off the gas from crude oil at Baba Gurgur oilfield, outside Kirkuk, Iraq. ©AP

Iraq’s state oil company and its semi-autonomous Kurdistan region have reportedly resumed joint oil exports from the Kirkuk oilfield, following a months-long halt in the process due to a dispute between the two sides on revenue sharing.

Since March, the Kirkuk flows had been halted as Baghdad pushed Iraq’s Kurdistan Regional Government (KRG) to cut a new revenue-sharing deal. Before that date, the flows were unilaterally handled by the KRG.

An unidentified informed shipping source said that shipments on behalf of the State Organization for Marketing of Oil (SOMO) resumed on Thursday morning.

The development comes as “final details of the revenue-sharing deal are still being worked out, the current flows of Kirkuk are being split 50/50 between SOMO and Kurdistan,” the source added.

The Kirkuk flows usually amount to 150,000 barrels per day (bpd) and are exported via the Turkish Mediterranean port of Ceyhan.

Ezat Sabir, head of the Finance Committee in the KRG Council of Ministers, said that he expected the 50/50 split of Kirkuk oil would remain until the year-end.

An employee works on August 27, 2016 in the Zubair-1 storage zone of the Zubair oil field, located southwest of Basra in southern Iraq. ©AFP

The central government in Baghdad has been locked in an oil dispute with the KRG. Since mid-2015, Kurdistan has been exporting crude independently, accusing Baghdad of having failed to respect an oil revenue sharing deal and transfer enough money to Erbil.

Baghdad, in turn, has accused Erbil of not exporting enough crude under the deal.

The cash-strapped KRG has expressed its readiness to hand over all oil exports to SOMO if Baghdad agreed to transfer USD 1 billion to Erbil from the federal budget each month.

Last week, Baghdad warned that it could divert the Kirkuk crude to Iran by truck instead of sending it to Kurdistan via pipeline if the talks with the KRG broke down.

However, a meeting between Iraqi Prime Minister Haider al-Abadi and his KRG counterpart Nechervan Barzani represented a breakthrough in the row as the two sides reached the preliminary deal on Kirkuk oil.

Falling oil prices have severely hit the Kurdish region, which like the capital, Baghdad, heavily relies on oil income to provide the majority of its funds.

This is while the northern and western parts of Iraq have been plagued by gruesome violence ever since Daesh terrorists mounted an offensive in June 2014.

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