Baghdad-Kurdistan reach oil payments deal

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An oil worker tending to a supply pipeline in Iraqi Kurdistan. Photo – AFP

Kurdish Energy Minister Ashti Hawrami announced on Sunday Baghdad will transfer oil payments to Erbil as part of efforts to resolve a long-running conflict between the central government and autonomous Kurdish region.

Iraq’s federal government and Kurdistan agreed earlier this month to negotiate a dispute over oil payments after the latter pledged to continue exports and former saying it would pay foreign companies working there.

Baghdad has previously denounced KRG’s deals with foreign oil majors, such as Exxon and Chevron, and termed them as illegal.

“Payments will be transferred to the Kurdish regional government today: that’s what I’ve been told in Baghdad today,” Hawrami told reporters in the Iraqi capital.

“This is great news. Payments are crucial for us to keep oil flowing,” an official working with a company operating in Iraqi Kurdistan told Reuters.

Iraqi Oil Minister Abdul-Kareem Luaibi, who also attended, described the talks as “very positive”. He added that crude exports would exceed 2.6 million barrels per day (bpd) in September and estimated production at more than 3.3m bpd this month.

Iraq wants to boost production capacity with the help of foreign firms beyond 12 million bpd by 2017, but is facing difficulty in achieving this target due to infrastructure and logistical shortcomings.

It is expected to target 8-8.5 million bpd, but some oil analysts and executives see even 6 million bpd by 2017 as stretch for the war-torn country.

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