KRG blames Iraq oil ministry for revenue dispute, says sales will continue

The Kurdistan Regional Government (KRG) says in a statement today that the Iraq Ministry of Oil’s (MOO) ‘Request for Arbritration’ against Turkey will fail to block further international sales of Kurd oil exported by pipeline to Turkey. It also accuses the Ministry of misleading the Iraq federal government over KRG oil revenues and of causing the longstanding revenue dispute between Baghdad and Erbil.

The KRG argues that this week’s sale of oil carried through a new pipeline from the Kurdistan Region is not fundamentally different to previous sales of oil carried by road. “The KRG has, with Federal Government knowledge, been exporting oil by trucking through Turkey and Iran for many years” it says. “This new pipeline export by the KRG is wholly consistent with the Constitution. There is no clear reason why the MOO should now depart from established practice in circumstances where the KRG is increasing Iraq’s exports by pipeline at reduced transportation costs”.

The KRG says the sales are constitutionally legitimate because the oil comes from fields discovered after the inauguration of Iraq’s 2005 Constitution: “The KRG has an exclusive authority under Article 112 and Article 115 of the Constitution to manage oil and gas in the Kurdistan Region extracted from fields that were not in production in 2005 (“new fields”). All of Kurdistan’s export oil comes from new fields”.

It also says the MOO has “consistently misrepresented” the scale of the KRG’s income from oil and gas sales.

“Most importantly”, it says, “the MOO has neglected to report to the Federal Government that the vast majority of the KRG’s oil export revenue is received directly by SOMO (State Oil Marketing Organization). The benefits of the KRG’s export have been accepted by the Federal Government and enjoyed by all Iraqi citizens”.

“The MOO’s misrepresentations have prevented the Federal Government from sharing revenues in accordance with the Constitution and has caused the Federal Government to wrongly restrict the KRG’s allocation of federal funds and annual budget entitlements”.

The KRG says this situation entitles it to receive the latest oil sales revenues directly. It adds that “as always” it will account to the Iraq Federal Government for its oil receipts, provided Iraq pays the KRG its agreed share of the national income.