BAGHDAD - The Iraqi finance ministry has begun payment of 650 billion Iraqi dinars ($547 million) to the Kurdistan Regional Government to pay foreign contractors in the oil industry as part of an agreement reached between the two sides earlier this month, an Iraqi government official said Tuesday.
"Iraq's deputy prime minister for economic affairs Mr. Rosh Nori Shawis confirmed Tuesday that the finance ministry has started measures to transfer the first payment of 650 billion Iraqi dinars," the official told Dow Jones Newswires.
Last week, Ashti Hawrami, KRG's oil minister, said that Baghdad will pay the initial IQD650 billion next week, adding that an additional IQD350 billion will be paid either by the end of this year or the beginning of 2013, depending on the central government's budgetary procedures.
Earlier this month the KRG and federal government in Baghdad resolved issues relating to oil payments to foreign companies producing crude oil in the region and Kurdish control of oil exports from Kurdistan.
The agreement comes after KRG suspended crude oil exports of nearly 100,000 barrels a day in April, citing a $1.5 billion backlog owed by Baghdad. It restarted them on Aug. 7, in what it said was a "goodwill gesture," but said flows would be halted if no payments were forthcoming by Aug. 31. The KRG later extended its deadline to Sept. 15.
The KRG said it had exported around 140,000 barrels a day last month and is planning to raise exports to 200,000 barrels a day from beginning of this month until the end of this year.
The Kurdish region hopes to set an average export target of 250,000 barrels a day in the 2013 federal budget, Mr. Hawrami said.
"In 2015, we are hoping to reach an average of 1 million barrels a day," he added.
This month's agreement resolves only part of a broader impasse between Baghdad and Kurdistan about the control of oil resources and territory.
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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