Kurds Reach Partial Oil-Export Deal With Iraq Government

Iraq’s Kurds announced a partial agreement on oil exports with the country’s federal government, in which the semi-autonomous region’s oil will be exchanged for revenues from the administration in Baghdad.

The Kurdistan Regional Government placed 150,000 barrels a day of crude at the disposal of the central government, according to a statement on the KRG’s website today. In return, the Federal government will transfer $500 million to the KRG. Kurdish Prime Minister Nechirvan Barzani will lead a delegation to Baghdad in the coming days for further talks, it said.

“We hope that the next meeting will bring positive results to both sides,” Safeen Dizayee, a Kurdistan government spokesman, said by phone. The oil “will be made available to Baghdad and as far as sale, marketing and how the funds will be handled will be Baghdad’s responsibility.”

The Kurds’ efforts to sell crude separately from the central government have provoked legal action by authorities in Baghdad. The Kurdish region holds 45 billion barrels of oil reserves, while the rest of Iraq has the world’s fifth-largest known deposits of 150 billion barrels.

Iraq’s Kurdish enclave is set to produce 1 million barrels a day of oil by the end of 2015, the regional government said in a Nov. 7 statement. It plans to export 500,000 barrels a day via neighboring Turkey by the end of March, it said.

At least nine vessels loaded cargoes of Kurdish crude amounting to about 231,000 barrels a day from the Turkish port of Ceyhan last month, according to tanker tracking data compiled by Julian Lee, an oil strategist at Bloomberg First Word in London.

The KRG said yesterday it approved plans to create an oil exploration and production company separate from the central government and a sovereign wealth fund to take in all energy revenue.

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