KRG Keeps The Faith With Baghdad But Cash Still Short

Iraq’s Kurdistan Regional Government (KRG) seems determined to make an oil export and revenue sharing deal with Baghdad work, even though the flow of federal funds to Erbil has so far been short of the commitment made by the Iraqi government as per the 2015 budget.

The KRG says it is on schedule with implementation of its oil export deal with Baghdad, having supplied almost 97% of the 250,000 b/d of Kurdish oil it promised to hand over to Iraq’s state marketing organization SOMO by the end of February.

Under a 2 December agreement that broke the deadlock which in 2014 deprived both sides of much needed cash, the KRG agreed to drop its earlier objections and allow SOMO to market 250,000 b/d of its oil in return for 17% of federal sovereign expenses, plus an additional $1bn contribution to salaries of Kurdish Peshmerga forces. Erbil also agreed to facilitate the export of 300,000 b/d of federal oil through its pipeline to the Turkish port of Ceyhan, allowing Baghdad to resume exports from northern fields, after a one-year interruption caused by insurgent attacks on the federally-controlled Kirkuk-Ceyhan pipeline system.


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