A deal aimed at resolving a dispute between Baghdad and Kurdish regional authorities over crude oil exports looked fragile with the semi-autonomous region’s Prime Minister threatening to withhold exports.

Both sides reaffirmed their commitment to a temporary oil export agreement reached in December, but Kurdish Prime Minister Nechirvan Barzani cautioned Baghdad against breaking its side of the bargain.

“If they don’t send the budget, we won’t send oil,” he said in comments published by Rudaw online newspaper.

A temporary agreement was reached in December whereby the Kurdish Regional Government (KRG) agreed to export 550,000 b/d of oil from its own fields and Kirkuk through Iraq’s state marketing authority Somo.

In return, Baghdad would reinstate budget payments to the Kurds, which it had cut early in 2014 as punishment for the region’s moves to export oil independently.

Barzani said Baghdad had only offered to send $300 million in Sunday’s talks, “less than half of what we agreed on earlier”.

“Obviously we have an agreement with a bankrupt country,” he said.
The December agreement was hailed as a breakthrough helping Iraq increase oil exports at a time when revenues are strained by low global prices and the cost of financing a war against Islamic State militants in the north and west.

The deal enabled Baghdad to pass a budget last month for the first time since 2013.

Arez Abdullah, chairman of parliament’s oil and energy panel, said Kurdish officials proposed Baghdad resume initial payments.
“They are discussing now ways to reach a compromise,” he told Reuters.

Source: Trade Arabia