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Iraq's Kurdistan halts oil exports in
payment row
1.4.2012
News update |
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April 1, 2012
ERBIL-Hewlêr, Kurdistan region 'Iraq',
— Iraq's Kurdistan region halted oil exports on
Sunday after Baghdad's top energy official warned it
to reconsider before following through on the threat
over the government's non-payment of funds.
The move by Kurdistan is the latest in a
long-running row between Baghdad and Kurdish
authorities in Erbil, who have have squabbled over
payments, revenue-sharing and the central
government's refusal to recognise deals Kurdish
officials have signed with foreign energy firms.
Kurdistan said a week ago that it had been exporting
50,000 barrels of oil, and threatened to stop
exports entirely if Iraq did not hand over $1.5
billion Erbil said was owed to foreign oil companies
working in the region.
On Sunday, Kurdistan followed through.
"After consultation with the producing companies,
the ministry (of natural resources) has reluctantly
decided to halt exports until further notice," the
Kurdistan regional government said in a statement on
its website.
"There have been no payments for 10 months, nor any
indication from federal authorities that payments
are forthcoming."
The statement said exports would be diverted to the
local market for processing and refining.
Before the Kurdish statement was released, the
national government's deputy prime minister for
energy affairs warned Erbil to consider its threats
and get "their act together."
"I would advise them, before they make any threat,
to consider how much oil (revenue) they are getting
from other parts of the country, which is much more
than the oil that is being produced there," Hussein
al-Shahristani said in an interview with AFP in his
office in Baghdad's heavily fortified Green Zone.
Shahristani, a former oil minister, noted that
Kurdistan was allocated 17 percent of Iraq's federal
budget, but said it provided a smaller proportion of
Iraqi oil exports.
He said the region was also not living up to its
promises on crude output.
"This is in breach of their commitment in the 2012
budget: the Kurdish region is required to hand over
175,000 barrels per day (bpd). Otherwise... they
will bear the consequences if that level is not met,www.ekurd.net
and there should be a financial compensation to the
ministry of finance," he said.
"They need to put their act together and hand all
the oil that's being produced in the region to the
ministry of oil immediately if they would like to
see the budget allocation in the 2012 budget...
implemented."
National Finance Minister Rafa al-Essawi told AFP on
Tuesday that the central government was "not afraid
of exports from the Kurdistan region being stopped."
He added that Iraq was readying to pay 650 billion
Iraqi dinars ($546 million) to foreign companies
operating in the northern three-province region once
it received the appropriate paperwork from official
auditors.
Iraq's central government has
approved payment of close to $560
million to oil producers in the autonomous Kurdistan
region, its finance minister said after Kurdish authorities
threatened to
halt exports due to a lack of payments from Baghdad,
Reuters reported.
Kurdistan has signed around 40 contracts with
international companies on a production-sharing
basis without seeking the express approval of the
central government's oil ministry, which regards
Kurdistan's deals as illegal.
The federal oil ministry, meanwhile, has awarded
energy contracts to foreign firms on the basis of a
per-barrel service fee. It has also refused to sign
deals with any firm that has agreed to a contract
with Kurdistan.
Shahristani also warned French energy giant Total,
which has said it is in talks over deals with the
Kurdish government, that any such agreements would
be illegal.
"If they sign a contract to develop a field in Iraq,
in any part of the country, without the approval of
the Iraqi government, they will be considered in
breach of the Iraqi laws, and they will be treated
accordingly," he said.
Total is part of a consortium along with China's
CNPC and Malaysia's Petronas to ramp up output at
the Halfaya field in southern Maysan province,
having been awarded the contract in December 2009.
Baghdad has yet to approve an oil and gas law that
would regulate the sector, with proposals
languishing for several years.
The official statement by
Kurdistan Regional Government
Oil exports from the Kurdistan Region halted. April
1, 2012
Erbil, Kurdistan Region - (KRG.org) Iraq - The
export of oil from the Kurdistan Region of Iraq has
been stopped from today because the federal
government in Baghdad has not honoured its payment
commitments, the Ministry of Natural Resources (MNR)
said.
“After consultation with the producing companies,
the Ministry has reluctantly decided to halt exports
until further notice. There have been no payments
for 10 months, nor any indication from federal
authorities that payments are forthcoming,” the MNR
said.
It added, “We hope that this is a temporary measure
and that those in the federal government responsible
for non-payment will quickly realise that their
failure to adhere to their agreements is not in the
interests of the Iraqi people.” No payment has been
received since May 2011.
“Once this unfortunate non-payment situation has
been satisfactorily resolved we will do our utmost
to increase exports above the target of 175,000
barrels per day included in the 2012 Iraq budget,"
the Ministry said. “From now on, production will be
diverted to the local market for processing and
refining to generate an alternative source of cash
flow for the producing companies.”
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