Foreign Policy Blogs

Baghdad’s Oil Payment Deal with Kurds Helps Boost Exports

Iraq Oil Minister

Iraq’s oil minister Abdul Kareem Luaiby anticipates his country’s exports for September to exceed 2.6 million barrels a day, a figure not reached in the last 20 or so years. Part of this increase stems from a deal cut between the central government and the Kurdish autonomous region. The Kurds had stopped exporting oil back in April to protest delays in payments for their crude. The matter has been resolved, with the Baghdad government paying 1 trillion dinars (about US$850 million) as of today.

Underlying this dispute are the contracts that the Kurdish Regional Government signed with Chevron and Exxon, which the central government does not recognize as legal. The country still has no binding law governing its hydrocarbon resources. The 2007 draft law is still stuck in parliament.

And these contracts are just part of the ongoing battle between the central government and the KRG over territory, revenues and the federal demarcation of power.

Iraq is now OPEC’s second largest producer after the Saudis, pumping out close to 3.4 million barrels a day, up from 2.6 million in 2010. Of the 3.4 million, Iraq now exports 2.6 million.

Nevertheless, many Iraqis still do without electricity or 12 hours a day, owing to inadequate infrastructure. The government wants to invest $500 billion between now and 2030 in energy projects over all, and maybe at some stage, OPEC’s second biggest producer will be able to turn on the lights anytime it wants.

 

Author

Jeff Myhre
Jeff Myhre

Jeff Myhre is a graduate of the University of Colorado where he double majored in history and international affairs. He earned his PhD at the London School of Economics in international relations, and his dissertation was published by Westview Press under the title The Antarctic Treaty System: Politics, Law and Diplomacy. He is the founder of The Kensington Review, an online journal of commentary launched in 2002 which discusses politics, economics and social developments. He has written on European politics, international finance, and energy and resource issues in numerous publications and for such private entities as Lloyd's of London Press and Moody's Investors Service. He is a member of both the Foreign Policy Association and the World Policy Institute.

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