Iraqi finance minister had cited KRG ‘leakages’
KRG says it lowered output in line with OPEC+ deal
Baghdad and Erbil locked in thorny budget talks
The Kurdistan Regional Government on Sept. 24 hit back against allegations from Iraq’s finance minister that rampant oil smuggling in the semiautonomous region was contributing to the country’s noncompliance with its OPEC production quota.
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In a statement, the KRG’s Ministry of Natural Resources said the accusations of oil smuggling were “baseless [and] completely speculative,” and noted that its production and export figures are independently audited and published by Deloitte.
The KRG’s website, however, only has export and production data posted up through 2016. A spokesman could not immediately be reached for comment.
“The KRG has already reduced its production after the OPEC+ agreement, and its recent gross production figures have been well below the fair pro rata levels compared with the rest of Iraq,” the ministry said.
The Iraqi federal government and the KRG have been at loggerheads for years over oil revenue sharing, with Kurdish authorities controlling crude production in its territory in northern Iraq. The KRG exports its crude via pipeline to the Turkish port of Ceyhan.
Under the supply accord between OPEC and 10 allies, known as the OPEC+ alliance, Iraq has agreed to hold its crude production at 3.404 million b/d from August through the end of the year, not including its required additional “compensation cuts” for pumping above its cap in previous months.
Iraq self-reported August output of 3.578 million b/d, with state oil marketer SOMO saying that federal Iraqi production constituted 3.122 million b/d and KRG production 456,000 b/d.
The six secondary sources used by OPEC to monitor member output, including S&P Global Platts, have consistently estimated Iraq’s production higher than the official figures. For August, secondary sources pegged Iraqi output at 3.65 million b/d.
The country’s inability or unwillingness to hold to its quota over the almost four years of OPEC+ cuts has been a sore spot for the alliance, with many members publicly and privately pressuring Iraq to improve its performance.
Iraqi finance minister Ali Allawi had said Sept. 22 that the KRG was largely responsible for Iraq’s noncompliance.
“There are indications that the KRG is not cutting back to the limits required by the OPEC+ agreement for which federal Iraq has to make up this difference,” Allawi told the Powering Iraq virtual conference.
Allawi, who also serves as Iraq’s deputy prime minister, added there may be unknown amounts of crude smuggling in the KRG.
“There might be leakages from some other [Kurdish] oil fields, or there might be leakages that go into trucking to various points, but we are not aware of the amounts,” he said.
In its statement, the KRG Ministry of Natural Resources called on the federal government for more transparency into its own production and export figures. The two sides are in the midst of thorny budget talks, with little resolution in sight.
“The KRG continues to engage with the federal government to implement its constitutional rights and will continue to act responsibly in its oil and gas operations,” the ministry said. “This is part of a wider dialog aimed at bringing certainty to our relationship, and ensuring that the rights and duties of both parties are respected in accordance with the constitution.”