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 Iraqi Kurdistan's energy minister says Gorran Oil report inaccurate

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Iraqi Kurdistan's energy minister says Gorran Oil report inaccurate‎  7.6.2012 

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Kurdistan Regional Government (KRG) Minister of Natural Resources Ashti Hawrami. Photo: Getty/ See Related Links
June 7, 2012

ERBIL-Hewlêr, Kurdistan region 'Iraq', — A report published by the Change (Gorran) Movement’s Economic Research Center claims that 39,000 barrels of oil a day have gone missing in the past year. The finding came after investigating a letter sent from Kurdistan’s Ministry of Natural Resources to the Iraqi government that asked for petrodollar money for 178,000 barrels of oil extracted in Kurdistan.

The report says that out of 178,000 barrels of oil, 95,000 have been exported through Iraqi oil pipelines, and 53,000 barrels a day have been sent to local oil refineries for domestic use, leaving 39,000 unaccounted for.

If a barrel of oil is sold for US$106, the report adds, then US$1.05 billion is missing.

In an interview with Rudaw, Kurdistan Regional Government (KRG) Minister of Natural Resources Ashti Hawrami says, “The entire report is based on wrong information, therefore the results are very far from accuracy and truth.”

Hawrami explains that the report claims oil exports via Iraqi pipelines started at the beginning of 2011, which is untrue. “Oil exports started in March 2011,” Hawrami says. “This is to say the number of barrels of oil exported via Iraqi pipelines is 109,000 barrels, not 95,000 as the report mistakenly claims. Thus the 39,000 barrels a day of oil they claim to be missing is 0.”

Bayazid Hassan, a Change Movement (Gorran) member of the Oil and Gas Committee in Iraqi Parliament, supports the results of the report saying, “The Iraqi government does not pay for oil extraction costs in the Kurdistan Region, because the Iraqi government says 39,000 barrels of oil are extracted on a daily basis and have gone missing. The government wants to know where that oil has gone. This is the basis of the oil problems between the Kurdistan and Iraqi governments. That is why the Kurdistan Regional Government halted oil exports on April 1, 2012.”

Hassan added, “The Iraqi budget is based on the revenue of 2.06 million barrels a day of exported oil. From that number, the Kurdistan Region was to send 175,000 barrels a day.”

Regarding the extraction cost payment to oil companies, Hawrami says, “LPG [liquefied petroleum gas] has been given to the Dana Gas Company as compensation for its work. Moreover, we have the right to spend $1 of each barrel of oil. Regarding how much oil has been exported and how much LPG is used, we have sent all those details to Baghdad. However, what has been given to Dana Gas is LPG, not oil.”

According to Kurdistan’s oil and gas law, enacted in 2007 in Kurdish Parliament, a revenue fund box was supposed to be set up, but has not been as of yet.

Hawrami says, “It’s true, it has not been set up yet. But we prepared the project a long time ago. The project was approved at the Kurdistan ministers’ meeting on May 12, 2011. After some notes from both the Ministry of Planning and Ministry of Finance, it was approved to be proposed to parliament.”

However, Kurdistan’s Council of Minister did not send the project to parliament.

As the Ministry of Natural Resources, we did our part, Hawrami said.

“I do not know why the project was not sent to parliament later,” he said.

KRG Ministry of Natural Resources halted oil exports earlier this year claiming that the Iraqi government was not abiding by an agreement it made with the KRG in 2011 to pay for the extraction costs of oil in the Kurdistan Region. The Iraqi government has not paid the companies for the last 10 months.

In a meeting with the Council of Ministers last month, KRG Prime Minister Nechirvan Barzani said, “The agreement has never been completely implemented by the Iraqi government.”

PM Barzani and the Ministry of Natural Resources claim that, according to the agreement, the Iraqi government is supposed to send 140,000 barrels a day to the Kurdistan Region from the Beji and Dora oil refineries, from 700,000 barrels they refine a day. The Iraqi government has sent only 33,000 barrels a day to Kurdistan since the beginning of this year; the amount has now dropped to 15,000 barrels a day.

Regarding whether the Kurdistan Region will resume oil exports via Iraq’s State Oil Marketing Organization (SOMO) or not, Hawrami said, “We will not export anything until Baghdad implements the 2011 agreement.”

According to statistics in the Journal of Turkish Weekly, published by the Anakara Strategic Research Center, Kurdistan’s oil reserve is 45 billion barrels, excluding Kirkuk oil.

Hawrami told Rudaw, “We can export 200,000 barrels a day and in a short period we can reach 300,000 barrels a day, but unless the Iraqi government complies with the agreement, we will not export any oil.”

KRG claims that the amount of kerosene and gas sent to Kurdistan by the Iraqi government is not sufficient for the region’s domestic use. Therefore, the Kurdistan Region imports the products via Iran.

Iraq has been threatening to cut off refined oil products to Kurdistan completely. This has worried the people of the region.

“We assure the people of Kurdistan that we will not let them down,” Hawrami told Rudaw. “The Kurdistan Regional Government has drawn a successful plan for energy provision. We have a plan B and a plan C for providing oil.”

The Journal of Turkish Weekly says the Kurdistan Region is preparing for direct oil exports via a pipeline built to the Turkish border.

At the energy conference held in Erbil last month, Hawrami said, “By August 2013, we will be able to export oil directly.” He also said that the revenue from 17 percent of the directly exported oil will be used in Kurdistan and the rest will be sent back to the Iraqi oil revenue treasury in Baghdad.

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