Baghdad and the local authorities of Iraqi Kurdistan signed an agreement allowing the resumption on Tuesday of oil exports from the autonomous region to Turkey, interrupted ten days ago, a "temporary" compromise to end a long dispute.
This agreement comes 48 hours after Baghdad and several other OPEC members announced a drastic reduction in their oil production from May. A decision that sent oil prices skyrocketing.
While the Iraqi government is betting on a barrel at an average of 70 dollars to supplement its budget over the next three years, the Kurdish oil file continued to poison its relations with Erbil.
Baghdad was very irritated to see the autonomous region go it alone by exporting its oil to the Turkish port of Ceyhan without receiving dividends.
The agreement was signed in Baghdad in the presence of Iraqi Prime Minister Mohamed Chia al-Soudani and Kurdish Prime Minister Masrour Barzani.
It provides for the resumption of Kurdish oil exports to Ceyhan "today" (Tuesday), according to an Iraqi Kurdish official.
Sales of Kurdish oil will now pass through the hands of the Iraqi State Oil Company (Somo), and no longer exclusively by the authorities of Iraqi Kurdistan, an Iraqi government official and an Iraqi Kurdish source have indicated under cover of anonymity.
In addition, Kurdish export revenues will be paid into an account managed by Erbil and supervised by Baghdad.
-"Vital stages"-
This agreement is "temporary", underlined Mr. Barzani on Twitter, because it will hold out until the vote by the Iraqi Parliament of a framework law on oil and gas: "But it is a vital step for end the long dispute between Erbil and Baghdad".
The "dispute" overflowed the Iraqi borders only ten days ago, when Turkey stopped importing oil from Iraqi Kurdistan.
The arbitral tribunal of the International Chamber of Commerce in Paris had previously considered that the Iraqi government was right to want to be the manager.
In 2014, Baghdad brought proceedings against its Turkish neighbor in this court, following Ankara's announcement to import oil from Iraqi Kurdistan to transport it to Ceyhan.
Ignoring the opposition of the federal government, Erbil began to export to Turkey. Today, these exports amount to approximately 450,000 barrels per day (bpd).
-"Salty reductions"-
The agreement will "give Baghdad the possibility of finally being involved in the oil sector of Iraqi Kurdistan, even if it is for the moment only the part concerning sales", explains to the AFP Yesar al-Maleki, Gulf analyst at the Middle East Economic Survey (MEES).
For its part, "Erbil will also be able to increase its income by stopping granting steep reductions" on its prices, he adds.
Oil is the cornucopia of both Baghdad and Erbil. Second country of OPEC, Iraq exports an average of 3.3 million barrels of crude per day. And crude accounts for 90% of its revenue.
This is also the reason why the rivalry between the two entities is so bitter.
In theory, Erbil should send part of its oil production to Baghdad to market it. In return, the federal government should pay the salaries of Kurdish civil servants.
But Erbil has never sent its oil and complains of chronic delays in the payment of benefits.
Pillar of OPEC, Iraq has joined forces with several other producing countries, such as Saudi Arabia, Kuwait and the Emirates to announce on Sunday a reduction of 211,000 barrels per day in its production from May.
Analysts note that these "voluntary adjustments" are intended to lift prices after a recent fall.
04/04/2023 15:45:55 - Baghdad (AFP) - © 2023 AFP
