KRG denies report of cut-price oil and says exports to double “within weeks”

The Ministry of Natural Resources of the Kurdistan Regional Government (KRG) today issued a statement denying a report that it is selling cut-price oil.

It described a story by Bloomberg news agency on 19 June about KRG oil as being “full of inaccuracies, half-truths and highly partisan comment.”

“The KRG would never consider exporting and selling the natural resources of Iraq at “half price,” either now or in the future,” the statement said.

“The KRG sells oil through the pipeline to Ceyhan on an international commercial market basis and unlike SOMO (the State Oil Marketing ‎Organisation, which claims an illegal monopoly over Iraq’s oil sales), it is able to deliver cargoes to its customers on its own vessels,” the statement said.

“Despite all the blackmail and threats by SOMO and the Ministry of Oil in Baghdad, the KRG has been able to deliver oil to its customers under commercially viable contracts, and all payments are being made into the KRG’s account in Turkey,” the statement said.

The statement said that the KRG’s export volumes are expected to double “within the next weeks”. The MEED Kurdistan Projects conference in Erbil was told earlier this month that oil exports will reach 400,000 barrels a day (b/d) by the end of 2014

The statement said that the KRG-managed export process is legal, constitutional and irreversible.

“The KRG has always argued that the key to Iraq’s unity is power-sharing and revenue-sharing as is demanded by the Constitution of 2005,” the statement said. “KRG oil sales are conducted within the framework of the Constitution and the Region’s Oil and Gas Law of 2007, which according to Articles 115 and 121 of the Constitution, supersedes the antiquated legal provisions on oil used by Baghdad.”

The statement said the exports were within the Kurdistan region’s 17 per cent entitlement of the federal Iraqi budget.

“That budget has been illegally withheld by the federal Prime Minister, Nuri al Maliki at a time when the Peshmerga forces are helping all Iraqis by fighting the scourge of terrorism,” the statement said.

The statement said the KRG is owed billions of dollars by the federal government. It has been forced to borrow money on the international market and accelerate the oil sales process in order to preserve peace and stability. The MEED Kurdistan Projects conference was told that the KRG was owed $7bn

The statement said the KRG remains “open to dialogue with officials in Baghdad, whomever they may be, to resolve all outstanding issues on oil and gas within the framework of the constitution.”