KRG ramps up independent oil sales

ANKARA / ARBIL - Reuters

REUTERS photo

Iraq’s semi-autonomous Kurdistan region (KRG) has ramped up independent oil sales since mid-June while cutting allocations to Iraq’s state oil firm SOMO in an escalating dispute over export rights and budget payments.

Kurdistan has sold at least 9 million barrels of oil in 11 tankers from the Turkish port of Ceyhan so far in June, according to shipping data and traders, compared to 5 million it allocated to SOMO in early June after which transfers largely stopped.

June became the first month of large independent sales since December last year, when the KRG agreed a deal with Baghdad to transfer up to 550,000 barrels per day to SOMO in exchange for Baghdad allocating Arbil 17 percent of budget payments.

The deal has faced troubles ever since with Baghdad accusing Arbil of allocating smaller-than-agreed amount of oil and Arbil saying Baghdad is paying less than a half of what is due. Neither side has yet called the deal dead but the blame game has continued for weeks.

“Unfortunately the (KRG) region has not complied with it until now,” Iraqi Prime Minister Haider al-Abadi said in his weekly address on June 28.

That followed a statement from the government of KRG earlier in June in which said it remained committed to oil transfers to SOMO but accused Baghdad of reneging on the deal.

“If Iraq’s federal government does not commit to the federal budget law, the KRG is obliged to consider other solutions to provide for the livelihoods of the Kurdistan region’s people and to solve the financial and economic crisis,” it said.

The KRG said its need for money was especially acute given the fight against Islamic State of Iraq and the Levant (ISIL) militants and the sheltering of a large number of refugees from Syria and Iraq.

Its independent shipments have created havoc at Ceyhan where tankers - which were previous meant to be loading oil from SOMO - have been queuing for weeks.

Last week, BP and Cepsa cancelled loadings due to a lack of oil in SOMO’s tanks and this week Total, Kogas and Gazprom Neft cancelled their loadings.