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Iraq has reached an agreement with the Kurdistan Regional Government to resume crude oil exports from three fields in the Kirkuk region, which will add some 150,000 barrels per day to the total exported by OPEC’s second-largest producer by the end of this week.
“Pumping operations started with test pumping at 70,000 barrels a day last Thursday and the Northern Oil Co. aims to boost it to its normal rate at 150,000 barrels a day this week,” Fouad Hussein, a member of the oil and energy committee of the Kirkuk provincial council, said on Sunday. “This is a good step and significant initiative to strengthen relations between KRG and the federal government.”
Oil pumped by Iraq’s North Oil Company from the Baba Gorgor, Jambour and Khabbaz fields is exported via a pipeline controlled by the KRG. Baghdad and the KRG ran into a dispute over payments for oil shipped via the pipeline in March, which led to the suspension of shipments. As a result, production at the three fields was suspended.
The agreement was a result of the efforts of Iraq’s new oil minister, Jabbar al-Luaibi, and Prime Minister Haidar al-Abadi. Iraq’s government has been working hard to ramp up crude oil exports, which are a major source of revenue, with July shipments reaching 3.71 million bpd, according to the International Energy Agency.
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Kirkuk is one of the richest oil regions of Iraq and it’s unofficially controlled by the Kurdish Regional Government. Early in August, ISIS chose the biggest field in the region as a target for an attack but it was neutralized by the KRG armed forces, the Peshmerga.
Control over Kirkuk is extremely important for Kurdistan, as it is overwhelmingly dependent on oil for its livelihood, just like Iraq. Currently, the Kurdistan Regional Government has control over some 45 billion barrels of oil (BP estimates), which is about a third of Iraq’s total. Now that KRG has won the right to market its own oil independently of Baghdad, it will likely do everything in its power to get access to more oil and that oil is in Kirkuk.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.