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KRG Halts Exports Over Payment Row with Baghdad

Source: Bloomberg 12/24/2012, Location: Middle East

Iraq’s semi-autonomous Kurdistan Regional Government stopped oil exports two days ago, according to an official of the central government.

“Kurdish authorities halted completely crude shipments from fields in the Kurdish region in northern Iraq through the Turkish terminal of Ceyhan” on the Mediterranean, Abdel Ilah Qassem, adviser to Deputy Prime Minister for Energy Affairs Hussain al-Shahristani, said by phone from Baghdad.

Kurds, feuding with the Iraqi central government over disputed land, crude sale revenue and energy contracts terms, have repeatedly halted exports and plan to complete separate export pipelines direct to Turkey in next two years, KRG Natural Resources Minister Ashti Hawrami said Dec. 3. Kurdish authorities have angered the administration in Baghdad by signing agreements with foreign companies such as Exxon Mobil Corp. (XOM) and Total SA (FP) without permission.

Before the closure, crude exports from the Kurdish region had dropped to 6,000 barrels a day from 180,000 barrels earlier this month, Qassem said. “I don’t think that the halt to crude exports is due to technical faults or problems because it is a total halt,” he said without wishing to specify the reason for the stoppage.

Iraq exports 2.6 million barrels a day of crude and will increase this to 2.9 million next years, he said. The nation’s average crude output is 3.2 million while oil capacity is 3.4 million barrels and will increase to more than 3.5 million in 2013, Qassem said.

Friction has intensified between the central government and Kurdish authorities since the U.S. withdrew its last combat troops from the country at the end of last year. Government soldiers clashed for the first time with Kurdish forces on Nov. 16, leaving one person dead.

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