The Iraqi federal government in Baghdad has reached an agreement with officials of the Kurdistan Regional Government on the distribution of oil revenues, solving only part of their differences over Iraq’s draft oil and gas law, a senior central government official said Thursday.
"We have reached an agreement last night on the distribution of financial resources," the official, who is a senior adviser to Iraqi Prime Minister Nouri al-Maliki, told Dow Jones Newswires.
He said the document called "financial resources law" would be submitted to the federal government in Baghdad for review because to become a law it needs the approval of the parliament.
The new law is necessary to solve one of the sticking points that faces the country’s controversial oil and gas law, said the official, who is also a top federal government negotiator with the Kurds.
The law called for setting up of two accounts: one covers external accounts where oil revenues generated from oil exports are deposited while the second consists of customs and taxes. The central government in Baghdad would take its needs to cover the national budget while the rest would be distributed among Iraqi governates and regions, the draft law stated.
The Kurds were arguing that their share of oil revenues should be given to them directly, by-passing the central Finance Ministry.
The official, however, said that the two parties haven’t yet reached agreements on other sticking points within the draft oil law.
"We are still negotiating with the Kurds on a number of provisions of the oil and gas law," the official said. "We haven’t reached an agreement so far."
The main sticking point that the Kurds differ with Baghdad, is over who should control untapped lucrative Iraqi oil fields whose estimated proven oil reserves could reach 115 billion barrels. The draft law suggested that most of these oil fields are to be controlled by a yet to be established national oil company. The Kurds reject that provision in the law.
The controversial oil law, which was meant to bring in international oil companies to invest in Iraq’s potentially lucrative oil industry, has missed several deadlines since it was passed by al-Maliki’s government in February. Most recently it missed a May 31 deadline set by the government, and is set to miss a further deadline being urged by the U.S. administration.