BAGHDAD: Iraq’s Finance Ministry has begun paying an initial $650 million to Iraqi Kurdistan for oil companies working in the autonomous region, Deputy Prime Minister Rosh Nuri al-Shawish told Reuters Tuesday.
Baghdad and the Kurdish Regional Government agreed last month to settle a dispute over oil payments, after the latter pledged to continue exports and the Iraqi government said it would pay foreign companies working there.
The KRG has angered Baghdad by inking deals with foreign oil majors, such as ExxonMobil and Chevron, contracts which the central government rejects as illegal.
“The federal Finance Ministry has started transferring the first oil payment of $650 million to the Kurdish region,” said Shawish, a Kurdish member of the central government negotiating team.
In April, the KRG halted shipments of oil in protest over what it said were overdue payments from the central government to companies in the Kurdish region.
It later resumed shipments, but threatened to cut them off again if there was no agreement on payment.
Kurdish Region Energy Minister Ashti Hawrami said Sunday that payments would be transferred to the autonomous region that same day, offering hope the long-running conflict is easing.
The oil contracts row is part of a broader battle between Baghdad and the KRG over oil rights, territory and regional autonomy that is straining Iraq’s uneasy federal union.
A version of this article appeared in the print edition of The Daily Star on October 03, 2012, on page 5.