Reality Sets In As KRG Imagines Life With Less Oil

The KRG lost any semblance of financial stability with the loss of nearly half ‘its’ oil production as Baghdad last month retook Kirkuk. Baghdad is tightening the screw on the region’s finances as a new order begins to materialize.

When Masoud Barzani, long-time president of Iraq’s Kurdistan Regional Government (KRG), resigned 1 November he left an Iraqi Kurdistan still reeling from the aftermath of its disastrous independence referendum held five weeks prior. The pyrrhic victory – 92.7% reportedly voted for independence – led to federal Iraqi forces reclaiming Kirkuk in October, alongside other disputed territories which had been held by the KRG since 2014.

Crucially, Kirkuk oil fields provided the KRG with around 280,000 b/d of its 610,000 b/d crude production. Kirkuk volumes also represented around 50% of the KRG’s 560,000 b/d crude exports on which government coffers depended and would have generated around $375mn per month at current prices. Even before losing Kirkuk, the KRG’s finances were precarious and dependent on oil prepayments from trading firms, as the government gambled on rising oil prices. Now the economy is in crisis.


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