Iraq: Major Challenges Remain For New Oil Minister Despite Kirkuk Breakthrough

Iraq’s new oil minister has scored a major breakthrough in KRG relations. Kirkuk exports have already restarted, with revenue to be split 50:50 between Baghdad and Erbil. This will provide a timely, if modest, boost to export revenues which though up in August are set to plumb 10-year lows for 2016 as a whole.

Iraq’s new Oil Minister Jabbar al-Luaibi faced a daunting in-tray upon being sworn in on 15 August (MEES, 19 August). Production growth had largely stalled. With oil prices hovering around $40/B for the country’s crude exports, annual revenues are on course for a 10-year low.

An agreement with the Kurdistan Regional Government (KRG) that will raise overall exports by around 4% is a welcome boost, but significant output gains in the south look more distant.

A dispute with the KRG that had rumbled on since the collapse of a revenue sharing agreement in June 2015 culminated in the cessation of 150,000 b/d exports from Kirkuk province in March. Baghdad, angered by the absence of any payment by the KRG for exports from the Baba Dome of the Kirkuk field, Khabbaz and Jambur fields since the KRG assumed control over them in mid-2014, ordered the Baghdad-controlled North Oil Company (NOC), which continues to operate the fields, to halt exports through Kurdistan. (CONTINUED - 1584 WORDS)