ARBIL, Iraq (Reuters) - Iraqi Kurdistan said Monday it is on course to keep its side of an oil export deal reached with Baghdad in December, as loadings from the region reached the highest since it was struck.
By the end of February, the Kurdistan Regional Government (KRG) had supplied almost 97 percent of the crude oil it agreed to hand over to Iraq’s State Oil Marketing Organization (SOMO) during that period, according to a statement from the Kurdish Ministry of Natural Resources.
Loading data from the Turkish port of Ceyhan on Monday showed exports from northern Iraq are set to reach 400,000 barrels per day (bpd) for the first time since the agreement was struck, from an average of 350,000 bpd over the past week and some 275,000-300,000 in February and January.
“The KRG (Kurdistan Regional Government) in turn expects the federal government to honor its obligations under the budget law and to provide the KRG with its legal monthly entitlement to its share of the budget, including the agreed special allocation of funds for the peshmerga forces,” the statement read. The peshmerga are the Kurdish regional armed forces.
Baghdad cut budget payments to the Kurds in January 2014 as punishment for their attempts to export oil independently, plunging the autonomous region into economic crisis and forcing it to seek loans at home and abroad.
Under the December deal, the Kurds committed to export an average of 550,000 barrels per day (bpd) from Ceyhan via SOMO in 2015, in return for the reinstatement of budget payments.
The agreement was hailed as a breakthrough that would help Iraq increase oil exports at a time when revenues are strained by low global prices and the cost of financing a war against Islamic State insurgents in the north and west.
But the deal has already showed signs of strain. So far this year, Baghdad has paid only a fraction of the Kurds’ budget share, arguing that the oil shipped did not nearly match the expected volumes, and it had been forced to reduce expenditure across the board.
The Kurds in turn blamed outages in neighboring Turkey and technical issues at the Kirkuk oilfields for a shortfall in January, but said this would be made up.
Additional reporting by David Sheppard in London; Editing by Mark Heinrich and William Hardy