Iraq says oil row with Kurds caused losses of $6.65 billion

Deputy Prime Minister Hussain al-Shahristani speaks to the press in Baghdad, Iraq, Monday, April 2, 2012. (AP Photo/Karim Kadim)

The Iraqi government incurred $6.65 billion in lost revenue over the past few years after the regional Kurdish government didn’t supply it with the agreed amount of crude for export, said Iraqi Deputy Prime Minister for Energy Affairs Hussain al-Shahristani.

“Lost revenue this year will be even more than last year,” he said at a news conference in Baghdad Monday.

Kurdistan reduced the agreed volumes “from 175,000 barrels a day in mid- 2011 to 70,000 barrels a day a few days ago before halting them completely Sunday,” he said.

The Iraqi central government should adopt “measures” toward resolving this issue, which is affecting the budget deficit, he said without elaborating.

The Kurdistan Regional Government, which exports crude through a pipeline controlled by Iraq, stopped crude exports after the Iraqi government failed to pay $1.5 billion owed to producers in the region since May 2011, according to a statement Sunday.

A dispute over oil revenues between Iraq’s government and Kurdish authorities led to a yearlong halt in exports from the region that ended in February 2011. Iraq holds the world’s fifth-biggest crude reserves, based on BP statistics that also include Canadian oil sands, and it seeks to boost oil shipments to help rebuild an economy recovering after years of conflict, sanctions and sabotage.

Iraq asked Iran and Turkey to curb the smuggling of oil from the semiautonomous Kurdistan region through their territories, Iraqi Oil Minister Abdul Kareem al-Luaibi told a news conference in Baghdad.

Most of the crude smuggled by tanker from Kurdistan is sold at “lower prices” to other countries at Iran’s port of Bandar Abbas, he said. “We have indications and detailed reports with numbers about crude smuggling to Iran,” Luaibi said.

Iraq only exports crude through government terminals and “doesn’t know where the money from the oil smuggling in Kurdistan is going,” he said. Kurdistan produced 68.11 million barrels of oil last year, of which 33.64 million barrels weren’t shipped via official channels, Luaibi said.

Iraq’s crude exports in March rose to 71.83 million barrels, or 2.32 million barrels a day, the most since 1980, Asim Jihad, an Oil Ministry spokesman said Sunday. The exports generated $8.475 billion, with an average price of $118 a barrel, he said.

A second single-mooring offshore facility will be ready for exports within two weeks, Luaibi said, expecting a higher level of exports this month.

The central government refuses to do business with companies working in the Kurdish region. Exxon Mobil Corp. sent a second letter Sunday to the Iraqi Oil Ministry to confirm that it has frozen contracts with Kurdistan. The company had sent a similar letter on March 22.

“We are now studying the letter and will decide on whether to allow Exxon Mobil to take part in the fourth licensing round,” Luaibi said.

The central government, which expects to pump 3.4 million barrels a day by the end of the year, has awarded 15 energy licenses since the 2003 U.S.-led invasion that ousted former President Saddam Hussein. It plans a new licensing round in May.

A version of this article appeared in the print edition of The Daily Star on April 03, 2012, on page 6.




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