The Iraqi central government has agreed to pay foreign companies working in Iraq's Kurdistan region 1 trillion Iraqi dinars ($850 million) for costs incurred to produce and export crude oil from the region as part of an agreement clinched with the Kurdistan Regional Government, or KRG, in northern Iraq Thursday, the KRG's ministry of natural resources said in a statement Friday.
Under the agreement, the KRG will continue oil exports from the region at 140,000 barrels a day for the rest of September, to be increased to 200,000 barrels a day for October, November and December, the ministry said.
The Iraqi federal government in Baghdad and the country's autonomous region in Kurdistan agreed Thursday to resolve issues relating to oil payments to foreign contracting companies producing crude oil in the region and that the Kurds will continue their oil exports, the country's deputy prime minister for economic affairs said.
The agreement resolves only part of a broader impasse between Baghdad and Kurdistan about the control of oil resources and territory.
The KRG suspended crude oil exports of nearly 100,000 barrels a day in April, protesting that Baghdad was delaying payment of $1.5 billion it gathered in revenue from those exports. It restarted them, however, Aug. 7, in what it said was a "goodwill gesture," but said flows would halt if no payments were forthcoming by Aug. 31. It later extended its deadline to Sept. 15.
The KRG last year received payments totaling $514 million to cover producing firms' past costs, but stopped supplying oil for exports in April this year, citing a $1.5 billion backlog owed by Baghdad.
The central government said earlier this year that it was preparing to pay another $560 million this year to foreign oil companies in Kurdistan, but it was waiting for the KRG to send documents to support the costs.
Copyright (c) 2012 Dow Jones & Company, Inc.
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