Page 8 - MEOG Week 32 2021
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MEOG POLICY MEOG
Baghdad and Erbil aim to turn a new page
IRAQ
THE Federal and Kurdistan Regional Govern- ments (KRG) in Baghdad and Erbil, respectively, this week said that they would seek a new start, built on improved relations as they seek resolu- tion on issues relating to oil sales.
Following a meeting between Iraqi Oil Minister Ihsan Abdul Jabbar and new Kurdish Minister of Natural Resources (MNR) Kamal Hamid Al-Atrushi, Iraq’s Ministry of Oil (MoO) released a statement expressing “readiness to work to remove all technical and financial problems and obstacles in order to preserve the national wealth that belongs to the Iraqi people according to the provisions of the constitution”.
According to the statement, Abdul Jab- bar stressed to his Kurdish counterpart the importance of high transparency between the administrations in relation to the management of oil wealth throughout Iraq, noting that they should seek to “solve outstanding problems through dialogue, exchange and respect of views while placing the national interest above all considerations”.
He also expressed “hope” that the meetings and dialogues with the KRG, especially after Minister Al-Atrushi assumes his duties, would “open a new page of serious objective dialogue to solve outstanding problems and serve the Iraqi people from north to south”.
In late March, the Iraqi Cabinet passed an agreement pegging the 2021 budget at IQD130 trillion ($89.65bn) with deficit estimated at IQD28.7 trillion ($19.79bn). With the country 97%-reliant on oil exports, the budget is based on an oil price of $45 per barrel with total exports averaging 3.25mn barrels per day (bpd).
After numerous voting delays and heated
exchanges between political factions, agree- ment was reached on major stumbling blocks, predominantly the KRG’s revenues from oil exports and non-oil revenues including customs fees and taxes.
As in previous budgets, the KRG will receive 12.67% of the total, with this contingent on it handing over the net revenues from 250,000 bpd of oil exports to Iraq’s state oil marketer SOMO and giving the revenues to the central treasury. Kurdish oil exports have long been seen by many in Baghdad as unconstitutional and in late Janu- ary, 113 MPs, most of them Shi’ite, wrote to the head of the parliament to ask that budget article 11 be redrafted to force Erbil to provide all out- put to SOMO.
It suggested that section 2a of article 11 should read: “The Kurdistan region will abide by sending 460,000 barrels of oil per day to SOMO, and in case of overproduction, they abide by sending the excess amount to SOMO as well.” While the KRG was never likely to agree to this, Erbil has committed to a minimum production level of 460,000 bpd.
A sign of progress came before this week’s meeting when in July, IQD200bn ($138mn) was transferred to Erbil from Baghdad. However, rather than an initial budget payment, the funds were intended to be used to pay the salaries of civil servants.
Abdul Jabbar also announced this week that Iraq intends to achieve crude oil production of 8mn bpd by 2027. While few of the barrels need- ing to be produced to reach that level will depend on Baghdad’s dealings with Erbil, negotiations with IOCs to develop the giant southern fields are likely to be almost as challenging.
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w w w . N E W S B A S E . c o m Week 32 11•August•2021
