A Clarification from the Ministry of Natural Resources
Erbil, Kurdistan Region, Iraq (GOV.KRD) - In a recent interview, Iraqi Oil Minister Ihsan Abdul-Jabbar referred to a number of issues related to the Kurdistan Region’s oil. Therefore, we consider it necessary to clarify and correct some of the issues discussed in the interview:
First: The federal government’s oil minister pointed out that the cost of producing oil in the Kurdistan Region is “high” and that the Kurdistan Region’s oil is “sold for 10 dollars less than the price of crude oil in Iraq.”
Undoubtedly, this is justified by the complex structure and nature of the Kurdistan Region’s fields, in so much that extraction costs more than Iraq’s oil fields. Unfortunately, due to problems and obstacles placed on the region’s oil by the federal government and SOMO company, the price of the region’s oil is lower than the price of the world’s markets to remain cost-effective.
Second: In the interview, the federal oil minister asks that the region’s oil dossier be handed over to SOMO and be centralized. According to the constitution, Iraq is a federal and decentralized state. Similarly, according to the constitution, for which the majority of the Iraqi electorate voted, the Kurdistan Region has the right to extract and sell its oil. This is why the request to hand over the region’s oil dossier is an unconstitutional request. However, we have continued to express our readiness to hand over the income of 250,000 barrels per day to the federal government, in exchange for the provision of the region’s financial entitlements and rights. We are always prepared to resolve issues between us, in line with the constitution, and reach a mutually-beneficial agreement that serves the interest of all Iraqi citizens.
Third: Regarding compliance with OPEC’s decisions, the Kurdistan Region has adhered to the 430,000 barrels per day for oil production. While the region has only allocated about 25,000 barrels for domestic use, the federal government has set aside one million barrels for domestic use.
According to the Kurdistan Region’s entitled federal budget share of 12.67%, the region should produce more than 600,000 barrels of the total of five million barrels of Iraq’s daily production. However, the region produces only 450,000 barrels, which means the Kurdistan Region produces far less than its entitled share. It is the Iraqi government that has produced oil more than it should. Therefore, the Iraqi government should adjust and reduce its production, not request the region to do so. Additionally, the Kurdistan Region has reduced its production by 30,000 barrels per day, in adherence with reduced oil production globally.
Fourth: The federal oil minister mentioned that Kirkuk’s oil fields belong to Baghdad, despite it being entrenched in law that Kirkuk is a disputed area, under the constitution, and that its status must be resolved in line with Article 140 of the constitution, which defines the ownership of these areas.
In conclusion, once again, we express our readiness to resolve issues related to the oil dossier in a way that is in the interest of both sides and of the citizen of Iraq.
Ministry of Natural Resources of Kurdistan Regional Government