A worker is seen at the Tawke oil refinery near the village of Zacho, in Kurdistan in 2009
A worker is seen at the Tawke oil refinery near the village of Zacho, in Kurdistan in 2009. The Iraqi government and the Kurdistan region struck a preliminary deal on Thursday on a months-long oil dispute that will see the autonomous region export 200,000 barrels of oil per day, officials said. © Ali al-Saadi - AFP/File
A worker is seen at the Tawke oil refinery near the village of Zacho, in Kurdistan in 2009
AFP
Last updated: September 13, 2012

Iraq and Kurdistan reach preliminary oil deal

The Iraqi government and Kurdistan struck a preliminary deal on Thursday on a months-long oil dispute that will see the autonomous region export 200,000 barrels of oil per day, officials said.

Kurdistan halted its oil exports via the federal government on April 1 over $1.5 billion it said is owed to foreign oil companies working in the region that Baghdad has allegedly withheld, but then resumed them again on August 7, in what was billed as a confidence-building measure.

A Kurdistan official then said on September 1 that the region would extend the exports until the 15th.

"The Baghdad government and the Arbil government have reached an agreement during a meeting held in the office of Deputy Prime Minister Roz Nuri Shaways," an Iraqi government official said on condition of anonymity.

"They agreed that the Kurdistan region will export 200,000 barrels (of oil) per day, and a committee will be formed from the two sides ... to settle the dues of the foreign oil companies working in the region," the official said.

Delegates on the Iraqi side included the oil minister and the head of the State Oil Marketing Organisation, the official said.

An official in the Kurdistan government, also speaking on condition of anonymity, confirmed that a deal had been reached.

The Iraqi official said the committee members will include officials from the trade, oil and finance ministries from the two sides.

Iraq's cabinet threatened on September 4 to cut the autonomous Kurdish region's budget by $3 billion over the suspension of oil exports.

Prime Minister Nuri al-Maliki's spokesman Ali Mussawi said that the cabinet had "decided to give the Kurdistan regional government one week to come and defend themselves," or the funds will be cut from Kurdistan's budget.

Baghdad and Arbil are at odds over issues including Kurdistan's refusal to seek approval from the central government for oil contracts it has awarded to foreign firms, and over a swathe of disputed territory in northern Iraq.

The federal government prefers per-barrel service fee contracts, while Kurdistan offers more lucrative production-sharing contracts that have drawn oil majors including ExxonMobil, Chevron, Total and Gazprom to risk Baghdad's wrath by signing deals with region.

Baghdad says all oil deals must go through the national oil ministry and regards any that do not as illegal.

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