International Business

Iraq has resumed pumping oil from fields operated by state-run North Oil Company (NOC) via a Kurdistan Regional Government (KRG) pipeline to Turkey, according to press reports. About 70,000 barrels per day (bpd) are being pumped through the pipeline controlled by the Kurdistan regional authorities, spokesman Asim Jihad told Reuters, giving no further details.

Pumping stopped in March due to a dispute between the government in Baghdad and the KRG over the control of Kurdish oil exports. The resumption of crude flows through the KRG pipeline should ease the financial burden on the autonomous government in Arbil that was hard hit by the collapse of oil prices two years ago.

KRG officials in February warned that the economic crisis could increase desertions from their Peshmerga fighters that are battling the Islamic State of Iraq and the Levant (ISIL) which controls vast swathes of territory just west of their region. The new oil minister in Baghdad, Jabar Ali al-Luaibi, expressed optimism on the day of his appointment on April 15 that the problem with the KRG could be resolved.

The KRG said on Aug. 17 it was ready to resume talks with the Iraqi government to reach a consensus on the issue of oil. KRG spokesman Safeen Dizayee said he welcomed remarks from the new Iraqi minister of oil. The KRG forces took full control of the long-disputed Kirkuk and its oilfields in June 2014 after the Iraqi army’s northern divisions disintegrated in the face of the advancing ISIL. The Peshmerga and the Iraqi army have taken back territory from the militants in northern Iraq and are preparing the final onslaught on their capital Mosul, with the backing of a U.S.-led international coalition.

Iranian-backed Iraqi Shiite militias are also fighting ISIL near the Kirkuk fields. Former Oil Minister Adel Abdul Mahdi in March demanded that the KRG return to a previous oil agreement or sign a new agreement in order to resume pumping through their pipeline. The previous agreement called for the KRG to transfer 550,000 bpd produced in their region to Iraq’s central state oil marketing company, in return for a 17 percent share in the federal budget. The Kurds stopped oil transfers to the government last year, at which point they also stopped receiving federal funds.

OPEC’s second-largest crude producer after Saudi Arabia, Iraq produces 4.6 million bpd, of which about 500,000 bpd from the Kurdish region and the rest from the oil-rich south. In comments on Aug. 18, al-Luaibi said he would focus on increasing the nation’s oil and natural gas output and also develop its refining capacity in order to cut its fuel imports bill, the ministry said in a statement.

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