Kurds Tighten Grip on North Iraq Oil Fields With Kirkuk Dealby and
Iraq's Kurds to pay nearby Kirkuk province for oil: statement
Pipeline exports of oil from Kirkuk, Kurd regions still halted
Iraq’s self-governing Kurds are cementing control over oil produced in the north of the country by agreeing to sell crude pumped in the contested province of Kirkuk, a year after they started selling all their own oil independently on global markets.
The accord covers oil produced in Kirkuk, which Kurdish forces occupied after federal troops fled the area ahead of advancing Islamic State militants in mid-2014, Kirkuk Governor Najmuddin Omar Karim said in an e-mailed statement. The Kurds, who are exporting Kirkuk crude with their own oil through a pipeline to Turkey, agreed to deposit $10 million a month into a dedicated bank account for Kirkuk, Karim said Wednesday.
Pipeline exports from northern Iraq to the Mediterranean port of Ceyhan, Turkey, are still halted, Karim said. Shipments have been suspended since Feb. 16 after attacks on the link inside Turkey, according to the Kurdistan Regional Government.
Iraq’s minority Kurds, who historically have chafed at control by governments in the capital city Baghdad, are independently developing oil reserves they say may total 45 billion barrels -- equivalent to almost a third of Iraq’s total deposits, according to data from BP Plc. The KRG and the central government have traded accusations of breaches to a December 2014 agreement that provided for the Kurds to export their oil through the national oil company in return for cash from authorities in Baghdad.
The financial arrangement between the Kurds and Kirkuk is in line with an earlier agreement about cooperation in the energy industry, a KRG official in the Kurdish city of Erbil said Wednesday in an e-mailed statement. The official couldn’t comment on details of the new accord, he said, declining to be identified in accordance with KRG policy.
Saad Al-Hadithi, spokesman for Iraq’s Prime Minister Haidar al-Abadi, said that he wasn’t informed of the agreement. All of the oil exported from Kirkuk last year was shipped via the Kurdish pipeline, he said Thursday by phone from Baghdad.
The failure of the Kurds and the central government to settle their differences over how to share revenue from oil sales has added to uncertainty about crude supplies from northern Iraq.
The Kurds produced an average of 577,000 barrels a day of oil in 2015, with exports averaging 421,000 barrels a day, according to a report issued last month by the KRG’s Natural Resources Ministry. The figures include oil pumped from Kurdish-controlled deposits in Kirkuk.
Iraq’s state-run North Oil Co. exported about 150,000 barrels a day through the Kurdish pipeline to Ceyhan before shipments were halted in February, according to the KRG. North Oil, which operates within Iraq’s oil ministry, will change its name to Kirkuk Oil Co., said Karim, the Kirkuk governor.
The Kurds generated $800 million a month from oil sales after deciding last June to export oil independently of the central government, but revenue dropped later to about $400 million a month, due partly to lower crude prices, KRG spokesman Safeen Dizayee said Wednesday in an interview in the Kurdish city of Erbil. Benchmark Brent crude has slid 40 percent in the last year and was 18 cents lower at $36.75 a barrel on Thursday at 3:39 p.m. in London.
The KRG has amassed $18 billion in debts to businesses and individuals, including unspecified payments owed to international oil companies working in Iraq’s Kurdish enclave, Dizayee said. Oil companies in the KRG-controlled area include DNO ASA, London-based Gulf Keystone Petroleum Ltd. and Genel Energy Plc. Genel on Thursday reported a $1.2 billion loss for 2015 after cutting estimated reserves at the Kurdish Taq Taq field where it has a 44 percent stake.
Iraq, the second-largest member of the Organization of Petroleum Exporting Countries, produced a total of 4.385 million barrels a day in February, data compiled by Bloomberg show, with most of the oil produced and exported from southern fields.