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Truth, Lies And Barrels Per Day
Confusion Reigns in Iraq-Kurd Oil Dispute

The deal done to resolve Baghdad's issues with Kurdish oil looks shaky. Both sides have presented different oil export numbers. Now some Kurdish MPs say they will resign, others want to honour the deal.
19.03.2015  |  Sulaymaniyah
The Iraqi flag flutters during the official opening of the second refinery for crude oil in Al-Dora refinery complex in Baghdad on September 16, 2010. The refinery will produce 70,000 barrels per day of white oil, gas, diesel and liquid gas. AFP PHOTO/ AHMAD AL-RUBAYE (Photo credit should read AHMAD AL-RUBAYE/AFP/Getty Images)
The Iraqi flag flutters during the official opening of the second refinery for crude oil in Al-Dora refinery complex in Baghdad on September 16, 2010. The refinery will produce 70,000 barrels per day of white oil, gas, diesel and liquid gas. AFP PHOTO/ AHMAD AL-RUBAYE (Photo credit should read AHMAD AL-RUBAYE/AFP/Getty Images)

In a move that seems to indicate yet again just how precarious the deal done to resolve issues around money and oil between the Iraqi government in Baghdad and the country's Kurdish region is, the two parties have come up with different sets of figures on oil exports.

The Iraqi government had stopped paying the part of the federal budget owed to the semi-autonomous northern region of Iraqi Kurdistan in 2014, as punishment for various disputes the two were having, including the fact that Iraqi Kurdistan was exporting oil independently of the central government. Relations had worsened but in a recent deal that was hailed as a breakthrough “the Kurds committed to export an average of 550,000 barrels per day in 2015, in exchange for Baghdad resuming budget payments of over $1 billion a month to Kurdistan in 2015,” the Reuters news agency reported.

The agreement, made as part of Iraq's 2015 federal budget law, stipulated that the Iraqi Kurdish should export 250,000 barrels per day of their own oil and 300,000 barrels per day from the Kirkuk fields that they currently control due to the security crisis.

However now the Iraqi government in Baghdad is saying that Iraqi Kurdistan has only delivered 135,000 barrels of oil a day to Iraq's central State Organization for Marketing of Oil, or SOMO. Meanwhile the Iraqi Kurdish government, based in Erbil, say they have been doing their best and have in fact delivered more like 400,000 barrels a day.

Iraqi Kurdish MP Ariz Abdullah, a member of the federal parliament’s Oil and Energy Committee, explained the differing figures like this: “If we divide Iraqi Kurdistan's oil exports over the past three months by the days, than the Iraqi Kurdish figures are correct. However the figures per day didn't always reach the quantity that was agreed upon,” he notes.

The latest report issued by the Iraqi Kurdish Ministry of Natural Resources earlier this month supports that explanation.

Iraqi Kurdish politician, Ali Hama Salih, a member of the anti-corruption Change movement and a senior member of the Iraqi Kurdish parliamentary committee on Energy and Natural Resources, confirmed the figures. “By the end of April, the quantities will be even higher, reaching 625,000 barrels per day,” Salih told NIQASH. “By the end of June, it should reach 750,000 barrels.”

The Iraqi Kurdish authorities insist that their oil figures are accurate. However more than one Iraqi Kurdish MP in Baghdad has heard the opposite from officials in the Iraqi government; these officials say that Iraqi Kurdish oil exports haven't come anywhere near the official figures.

“[Iraqi Prime Minister] Haider al-Abadi told us in no uncertain terms in a meeting with him that none of the numbers are right,” one Iraqi Kurdish MP told NIQASH off the record – he did not want to be named because he didn't want to be seen contradicting the regional government's official statements. “Al-Abadi said that the Kurdish are talking about a certain quantity but we are getting a different quantity. And that's why we're not making any progress on this deal.”

So far the one thing that isn't in dispute - and maybe that's because it is far more quantifiable - is that the Iraqi federal government has not been able to hold up its side of the deal. Baghdad has sent a first payment to Erbil of around US$200 million. But this is far from the amount that is owed - Iraqi Kurdish government representatives have criticised the payment as being only 20 percent of the money owed them; they are supposed to receive US$1 billion a month. The most recent reports say that more cash is coming to Iraqi Kurdistan from Baghdad.

“Baghdad should send the region its share of the budget,” Safeen Dizayee, the spokesperson for the government of semi-autonomous Iraqi Kurdistan, told NIQASH. “The decision taken by Baghdad [not to send the money] means that the budget law has lost its meaning. Iraqi Kurdistan has stuck to its side of the deal and is now exporting 250,000 barrels per day. That number is rising every day. The problems before lay in the fact that Kirkuk couldn’t export its share of oil because of technical problems.”

The ongoing dispute, which looked like it might have been moving towards some sort of resolution up until relatively recently, has seen a few antagonistic reactions from local decision makers as well as fears about potential repercussions all round.

At the recent Sulaymaniyah Forum, held at the American University of Iraq earlier this month, the two oil ministers from Baghdad and Erbil faced off. Iraq's Minister of Oil, Adel Abdul-Mahdi, said that Iraqi Kurdistan has only met about 40 percent of it's commitments. At the same meeting, Iraqi Kurdistan's Minister for Natural Resources,Ashti Hawrami, denied this and argued that his region had met 97 percent of their commitments.

Energy and Natural Resources committee member Salih told NIQASH that if Baghdad doesn't deliver on promises soon that Iraqi Kurdistan will stop sending SOMO oil and go back to exporting independently. If oil prices remain as they are and Iraqi Kurdistan's output can be maintained, then the region will strive for financial independence, selling oil all by itself, Salih maintained. However he was not able to specify who might buy the oil or how sales mechanisms might work.

However there are also plenty of dissenting opinions, with many in Iraqi Kurdistan believing that it is in their best interests, and in Baghdad's interests, to abide by the agreement. Kurdish government spokesperson Dizayee put emphasis on this during his interview with NIQASH, saying that the region will continue to try to stick to the deal and that a delegation from Iraqi Kurdistan is already planning a visit to Baghdad to try and sort current problems out. The timing for such a visit has not yet been specified though, Dizayee said.

Iraqi Kurdish politicians in Baghdad have threatened that if some agreement isn't reached soon then they will leave Baghdad - and, they say, this includes Iraq's own President, the senior Iraqi Kurdish politician, Fuad Masum, and Iraq's Minister of Finance, Hoshyar Zebari.

For the ordinary people of Iraqi Kurdistan, who has the right numbers in terms of barrels per day or percentages of the deal done, doesn't matter. Most important to them is that the two sets of authorities start to find common ground. The so-called financial blockade imposed by Baghdad last year has had a major effect on Iraqi Kurdistan, which is already struggling with increased costs of security and an influx of refugees due to the current crisis caused by extremists from the Islamic State group; the region's much-vaunted economic growth has slowed as salaries have been left unpaid and projects unfinished.

“A third party should get involved now,” says Warya Hawrami, who heads the DOR organisation in Iraqi Kurdistan, an NGO which publishes monthly reports on Kurdish oil production. “Or perhaps the Iraqi Parliament should step in and investigate to find out which figures are correct. The one thing that should not happen is that this situation go on forever - and the gap between Erbil and Baghdad should not widen any further.”

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