The Iraqi government has resumed pumping oil from fields operated by the North Oil Company through a Kurdish pipeline that runs through Turkey, according to remarks from a spokesperson from the oil ministry on Thursday.
Around 70,000 barrels per day are currently being pumped through the pipeline, which has been under the control of Kurdish forces, Asim Jihad told Reuters.
The Iraqi government and the Kurdistan Regional Government have had difficulty agreeing on the terms of oil exportation contracts in recent months.
The disagreements have led Baghdad to hold back 150,000 barrels per day of crude in Kirkuk from being exported to their final destination, blocking revenues for the cash-strapped KRG.
Without the 150,000 barrel-per-day bump, the KRG will likely have to settle for a 100,000 barrel per day flow rate, the revenues of which would not be able to cover the hundreds of millions of dollars it takes to run a government and the Peshmerga.
The KRG has exported 514,236bpd in June at an average price of US$36.43 per barrel, but saw a decline in both volume and price in July in which it managed to export 457,314 bpd against a price of US$32.52 per barrel.
The KRG has been pushing a deal to offer Baghdad full control over oil exports. In return, Iraq would have to guarantee Kurdistan $1 billion in revenues every month. The proposed figure would represent 17 percent of Iraq’s national budget. Related: Will Iraq’s New Oil Minister Be Able To End The Iraqi Oil War
Similar deals in the past have not come to fruition, causing trust between the rival governments to suffer. However, Iraq’s new oil minister, Jabar Ali al-Luaibi, expressed optimism that the matter could be resolved.
"There are solutions to the existing problems between the federal government and the Kurdistan Regional Government about the oil file,” the former South Oil Company executive said, according to Reuters.
Iraq, the second largest oil-producing member of the Organization of Petroleum Exporting Countries (OPEC) after Saudi Arabia, produces 4.6 million barrels of crude oil every day. Most of the supplies come from operations in the southern portion of the country, which are run under the South Oil Company.
By Zainab Calcuttawala for Oilprice.com
More Top Reads From Oilprice.com
- Saudis Ramping Up Oil Output To Gain Leverage In OPEC Talks
- Solar and Wind Manufacturing Is Thriving. Why Don't Mainstream Reporters Know?
- Is The Oil Production Efficiency Boom Coming To An End?