November 22, 2014 / 9:43 AM / 4 years ago

U.S. welcomes oil deal between Iraqi Kurdistan and Baghdad

ISTANBUL (Reuters) - U.S. Vice President Joe Biden welcomed an agreement between Iraq’s central government and its northern Kurdistan region over the management of oil exports, a step forward in a feud that has threatened the unity of Iraq.

In a speech in Istanbul on Saturday that touched on energy issues from Russia to Cyprus, Biden said he was encouraged to see a recent interim agreement between Baghdad and Arbil on managing exports and revenue sharing.

After years of friction, the two sides last week struck a deal in which Kurds will give half of their overall oil shipments to the federal government and Baghdad will pay overdue civil servants’ salaries in the region.

Oil has been at the heart of a feud between the Arab-led government in Baghdad and the ethnic Kurdish-run northern enclave, with disputes over oilfields, territory and crude revenues shared between the two regions.

The Kurdish autonomous region and the Baghdad government are both important actors in the fight against Islamic State militants who have captured broad regions of Iraq and Syria.

Biden, who was speaking at an Atlantic Council summit, also said that Washington supported the development of an oil pipeline from southern Iraq’s Basra oilfields to Turkey’s Mediterranean port of Ceyhan, a project which Turkey has long advocated despite reluctance in Baghdad.

Addressing tensions in Ukraine, Biden warned that Moscow should not use its energy resources as a political weapon, and said that Europe should look for alternative energy solutions.

“I have no doubt Russia will and should remain a major source of energy supply for Europe and the world. This is about energy security. To achieve it, Europe needs to make sure it diversifies its resources, its routes and its suppliers.”

Russia and Ukraine reached a temporary pricing deal last month after Moscow switched off the gas supply to its ex-Soviet neighbor, amidst worsening relations over Russian support for rebels in eastern Ukraine.

Biden also touched on the exploitation of Cypriot gas reserves, a source of tension between Cyprus and Turkey, which does not recognize the EU member country.

Biden said the reserves could be a force for stability and prosperity in the region if Cyprus developed them in cooperation with all its neighbors.

Talks between Cyprus and its politically and ethnically separate Turkish Cypriot north have broken down in recent weeks.

Speaking shortly after Biden, Turkish Prime Minister Ahmet Davutoglu warned that any unilateral exploitation of gas near Cyprus would be met with a similar response by northern Cyprus.

“That’s why parties should return to the negotiating table as soon as possible,” Davutoglu said.

Writing by Nick Tattersall and Jonny Hogg; Editing by Jonny Hogg and Stephen Powell

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