Engineers walk in the grounds of the Khurmala oilfield 10 kms south of the Iraqi Kurdish city of Arbil
The Khurmala oilfield in Iraqi Kurdistan. Iraqi Kurdistan claimed on Thursday that the central government has not handed over months of promised oil income while the region's leader said officials in Baghdad were vindictive "failures". © Safin Hamed - AFP
Engineers walk in the grounds of the Khurmala oilfield 10 kms south of the Iraqi Kurdish city of Arbil
Abdel Hamid Zebari, AFP
Last updated: March 15, 2012

Iraqi Kurdistan claims central government owes $1 billion for oil pumped in 2011

Iraqi Kurdistan claimed on Thursday that the central government has not handed over months of promised oil income while the region's leader said officials in Baghdad were vindictive "failures".

The charges were the latest in a long-running dispute over energy contracts and revenues between authorities in Baghdad and in the autonomous Kurdish region.

Kurdish leaders and the central government have squabbled over payments, revenue sharing and Baghdad's refusal to recognise the dozens of oil contracts Arbil has signed with international energy firms.

On Thursday, the Kurdish regional government posted a statement on its website insisting it could increase its production to 175,000 barrels per day (bpd), but Baghdad "owes the KRG (Kurdistan Regional Government) more than $1 billion for revenues accrued in 2011."

"Furthermore, not a single dollar has been received for exports in 2012."

The statement accused the federal authorities of "failing to meet their obligations and honour their payment commitments to the KRG."

It said the region could produce up to 250,000 bpd, "but only if the federal government honours its payment agreements. Otherwise, even the 90,000-100,000 barrels per day currently being exported will decline and eventually cease."

Thursday's statement said federal oil ministry claims of output of 65,000 bpd indicated a discrepancy that required an investigation "in case somebody is creaming off the difference between the oil received and the oil sold."

Kurdistan regional president Massud Barzani sharply criticised central government officials who disputed the validity of Kurdish contracts with foreign firms.

"The officials in the central government who refuse to admit these contracts are failures who could not give to Iraq what we give to our people in Kurdistan," Barzani said in a speech in regional capital Arbil. "They want us to be like them."

He continued: "The problem is not whether these contracts violate the constitution or not, but that they (central government officials) do not want the region to develop."

Barzani did not explicitly name any of the officials he was referring to.

The Kurdistan region has signed around 40 contracts with international companies on a production-sharing basis without seeking the express approval of the central government's oil ministry.

The federal oil ministry, meanwhile, has awarded energy contracts to international companies on the basis of a per-barrel service fee. It has also refused to sign deals with any firm that has agreed a contract with Kurdistan.

That refusal was put in the spotlight in October, when Kurdistan inked a deal with ExxonMobil to explore six areas of the region. The US firm had previously signed a contract with Baghdad to ramp up production at the West Qurna-1 field, Iraq's second-biggest.

Iraq has said the oil giant must choose between the two contracts.

Baghdad has also yet to approve an oil and gas law that would regulate the sector, with proposals languishing for several years.

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