Page 14 - MEOG Week 01 2021

MEOG POLICY MEOG

Iraq approves budget but issues remain

IRAQ IN late December, the Iraqi Cabinet gave its amount equating to the value of Kurdish oil rev-
approval to the government’s draft 150 trillion enues. However, the KRG’s Deputy Prime Min-
dinar ($103bn) budget for 2021 despite issues ister Qubad Talabani said on December 28: “If
persisting about oil exports from the Kurdistan the budget is approved, we, as the KRG, are ready
Region. to deliver 250,000 bpd of Kurdistan Region oil
As with previous budgets, the Kurdistan through SOMO.” He noted that Erbil had “always
Regional Government (KRG) should receive wanted to reach a comprehensive agreement
12.67% of the total budget, equating to around with the federal government.”
$13bn, but there remain issues related to budget Wording in the budget saw Baghdad agree
payments to Erbil being contingent on it handing to cover the transportation costs of 250,000 bpd
over 250,000 barrels per day (bpd) of crude to through the KRG’s export pipeline to Turkey as
Iraq’s State Oil Marketing Organization (SOMO) well as the 100,000 bpd of crude from the Kirkuk
and giving the revenues to the central treasury. field that is already sent through the conduit. The
Earlier reports suggested that the KRG Baghdad-controlled section of the Kirkuk-Cey-
would have to provide SOMO with “unspecified han line remains unusable. Kurdish crude is fed
amounts of oil”. into the main line at the Fishkhabour metering
However, Middle East Oil & Gas (MEOG) station near the Turkish border.
understands from local sources that the semi-au- Meanwhile, a report by Reuters quotes two
tonomous government may struggle to hand Iraqi government sources as saying that the state
over any oil having already transferred its rights budget deficit is anticipated to amount to 63 tril-
to market crude to trading houses to act as lion dinars ($43bn) in 2021.
guarantees for loans that have been in place for In an effort to ease the strain on state finances,
around seven years. Baghdad’s central bank has also sought to
As such, the authorities were considering devalue the dinar by increasing the US dollar to
reducing the KRG’s cut of the budget by an 1,460 dinars from 1,182 dinars.™

Iran resumes gas exports, cuts oil target

IRAN IRAN has restarted gas flows to Iraq after an financial resources in Iraq more quickly to pur-
agreement was reached between Tehran and chase basic goods and other needed items in
Baghdad regarding the latter’s arrears. Mean- the near future.” Meanwhile, Baghdad said
while, the Islamic Republic’s parliament lowered on December 21 that it would export 700,000
the government’s oil export target from 2.3mn tonnes of barley to Iran for $125 per tonne as
barrels per day to 1.5mn bpd. part of the repayment plan, with cash and other
Gas supplies to Iraq were cut in late Decem- goods to be used in a partial barter arrangement.
ber with Baghdad owing its neighbour more
than $6bn for gas already provided, increasing Export cut
the likelihood of power shortages across the Iran initially proposed boosting its exports con-
country. However, an agreement was reached siderably with an incoming US Biden admin-
by Iranian Energy Minister Reza Ardakanian istration; however, the knock-on effect from
and his Iraqi counterpart, Majid Mahdi, during coronavirus (COVID-19) on global demand and
a meeting in Baghdad for flows to resume at nor- the possibility of extended sanctions have caused
mal rates. the country to revise down its figures.
Ardakanian told state news agency IRNA: The Iranian parliament’s corporate commit-
“good agreements were reached with the Iraqi tee, in charge of the overall official export fig-
officials to withdraw Iranian funds from Iraq ure, said with the current situation that export
to pay for the purchase of the coronavirus vac- number was “unrealistic” and would need to be
cine from Europe using Iran’s existing financial changed. “The 2.3mn-barrel sales ceiling was
resources in Iraq.” This followed the announce- unrealistic and non-realisable ... In the most
ment by Tehran that it had been given the optimistic case, members of the commission
go-ahead by US authorities to transfer $244mn reached the conclusion that the government
to buy coronavirus vaccines from the WHO’s could achieve exports of 1.5mn barrels,” said
COVAX alliance. Malek Shariati-Niasar, head of the energy board
The gas deal was reached after Iraq had paid in the parliament.
an “appreciable portion” of the debt to Iranian He added that the commission had con-
state gas and electricity companies, according cluded that the government can count on only
to Ardakanian. He added: “With these new 1mn bpd in the current climate, but noted: “we
arrangements, we hope to use our existing can revise this up to 1.5mn bpd.”™

P14 www. NEWSBASE .com Week 01 06•January•2021