The Kurdistan Regional Government has finally announced terms of their agreement with Baghdad central government only if Baghdad is able to guarantee monthly revenue of almost double what they currently earn for a total of $1US billion per month paid by central Iraq.
The Turkish pipeline on the mediterranean port of Ceyhan exports 150,000 barrels of oil per day for the Iraqi government owned, North Oil Company. The same pipeline is also used by the Kurdistan Regional Government to export and sell their oil independently from Baghdad.
It was a year ago that Kurdistan decided to stop exporting oil to Baghdad when government payments dropped below $400US million according to Safe Dizayee, a spokesman for the Kurdistan Regional Government (KRG)
Mr. Dizayee stated recently, "If Baghdad comes and says OK, give me all the oil that you have and I'll give you the 17 percent as per the budget, which equals to 1 billion, I think, logically it should be the thing to accept," he told Reuters, specifying later that the amount referred to a monthly payment in dollars. Whether this oil goes to the international market or first to Baghdad and then to the market, it doesn't make any difference," he said. "We are ready to enter dialogue with Baghdad."
Baghdad-based oil analyst Hamza al-Jawahiri concedes that "The Kurds are offering a win-lose deal for Baghdad: a win for them and a loss for Baghdad, what’s the point of asking the central government to pay double the value of the region’s oil?"
In the past month, KRG has exported 513,041 barrels of oil per day through Ceyhan, Turkey, which generated $391US million. $75US million was paid to the oil companies and operators producing the oil.
Mr. Dizayee also added that "The companies have been assured that certain amounts will be made on a monthly basis, we have started to pay some of it, at least it has rebuilt that confidence between the government and the IPCs (oil companies)," he said, referring to arrears owed to the companies such as DNO, Gulf Keystone and Genel.
The KRG also announced that it would honor payments outlined in contracts with international oil companies instead of making spontaneous payments such as last year; yet despite this announcement, foreign operators have been skeptical about investing in Iraqi Kurdistan seeing as regular payments have been inconsistent. However, the KRG now desperately needs oil production to increase in an effort to avoid a complete economic collapse that was caused primarily by the decline in oil prices which began in 2014.