Tensions between Baghdad and the Kurdistan Regional Government (KRG) ratcheted up still further on 4 August after Iraq’s cabinet announced it would give the Kurds a week to explain their failure to make agreed contributions of 175,000 b/d to exports or face the consequences.

These consequences would be equal to losses suffered by the 2012 budget as a result of the shortfall, estimated at $3bn, Baghdad said. The Kurds began reducing their contribution late last year after Baghdad allegedly failed to make agreed payments to cover foreign oil company development, and then Irbil cut them exports altogether on 1 April. Then after four months of deteriorating relations, the KRG restarted exports at a rate of 100,000 b/d at the beginning of August as a confidence building measure. (CONTINUED - 879 WORDS)