ERBIL, Kurdistan Region – Baghdad has ordered the autonomous Kurdistan Region in the north to contribute 400,000 oil barrels per day (bpd) to Iraq’s overall crude exports, warning of more cuts from the federal budget if it is unable to comply, a senior Kurdish official said.
“The Kurdistan Region will not export such an amount of crude oil without Baghdad covering the costs of the oil companies operating in the region,” Rashid Tahir, deputy finance minister in the Kurdistan Regional Government (KRG), told Rudaw.
He claimed that Iraq’s projected oil exports of 3.4 million bpd by the end of this year were based on 400,000 of that coming from the Kurdistan Region. Baghdad has been boosting production at its prized Majnoon oil fields in southern Basra province.
The landlocked Kurdistan Region is currently exporting only about 50,000 bpd to Turkey on trucks, after stopping supplies through a pipeline controlled by Baghdad. A new pipeline to Turkey, with a capacity of 300,000 bpd, is expected to be finished by the end of this year.
“There is no one to hold Baghdad accountable if it fails to export 3 million barrels per day, that’s why imposing such a requirement on the KRG is not fair,” Tahir said.
The opposition Change Movement’s (Gorran’s) Bayazid Hassan, a lawmaker in the Iraqi parliament’s oil and energy committee, confirmed that Baghdad had made such a threat. But he said he was doubtful it would follow through with it.
“Every time Baghdad confronts us about Kurdistan’s oil policy we are left speechless,” he added. “Baghdad cannot afford to make more enemies at this point, when the country’s security situation is deteriorating,” he said, referring to violence and bomb attacks everywhere in Iraq except the three-province Kurdistan Region.
Iraq’s Shiite-Arab central government and the largely Sunni Kurds in their northern enclave have been at loggerheads over disputed territories, control of the Kurdistan Region’s energy resources and Erbil’s share of the national budget.
The Kurds – together with US oil majors and Russian and Turkish firms -- have completely ignored Baghdad’s stipulation that oil contracts for exploration, production and exports must go strictly through the central government.
In return, in the current year’s budget, Baghdad only allocated a fraction of the 4 trillion Iraqi dinars ($3.5 billion) that the KRG insists it is owed for work by foreign oil companies.
According to an agreement between Baghdad and the KRG, 17 percent of the country’s annual budget should be earmarked for the Kurdistan Region until a new census is conducted.
But Tahir said that, “The KRG’s budget entitlement has never exceeded 11 percent.” He estimated that the region’s annual fair share is as high as 30 trillion dinars.
“Baghdad wouldn’t send us more than 19 trillion dinars,” he complained, adding that another budget cut would plunge the KRG into a 6 trillion dinars deficit in 2014.
Tahir claimed that, while 1 trillion Iraqi dinars should have come from Baghdad for developing the Kurdistan Region’s oil sector, the central government “has not sent the Kurdistan Region a penny for this purpose.”
He accused Baghdad of manipulating the budget law to work to its own advantage. “They keep increasing the federal expenditure in order to reduce Kurdistan’s annual share,” he argued.
He also dismissed that the KRG’s financial affairs lack transparency. “The region’s budget for 2014 has been drafted based on the International Monetary Fund’s (IMF) plan,” he asserted.
When asked whether the KRG shares its other revenues with the central government, Tahir said: “Last year alone, the KRG gave Baghdad $1 million from its taxation and border custom revenues. The border custom in Basra collects a large amount of revenue, but it has never been added to the overall federal budget,” he claimed.
Tahir said that Baghdad currently owes the Kurdistan Region 27 trillion dinars.
He revealed that the KRG is looking to boost employment, and plans to hire at least 15,000 people in 2014.
