Iraq 2013 Budget Allocates $650M to Firms Working in Kurdistan

The Iraqi parliament Thursday passed the country's 2013 budget, allocating some $650 million to central government payments to companies working in Kurdistan, a leading Iraqi lawmaker said.

Ibrahim al-Mutlaq, a member of the parliamentary finance committee, said Kurds boycotted the session which led to the passing of the budget. They had asked for 4.2 trillion Iraqi dinars ($3.5 billion) to be paid to companies producing oil and gas in Kurdistan.

Kurdish officials weren't immediately available to comment.

The Iraqi parliament postponed a vote on the 2013 budget, running at $118.6 billion, many times because lawmakers differ on whether Baghdad should allocate money to companies working in Kurdistan, in the north of the country.

The Kurds have suspended crude oil exports via the Baghdad-controlled export pipeline since December last year, protesting against delays in payment to producing companies in the region. Even in November, the Kurds didn't reach export levels of 250,000 barrels a day, as agreed with Baghdad.

The Kurds want the budget to include some IQD4.2 trillion Iraqi dinars as payments due to oil companies working in the Kurdish region. The Kurds said this amount would cover retroactive payments from 2010 up to 2013.

Meanwhile, Iraqi Prime Minister Nouri al-Maliki's bloc in parliament, the State of the Law, is arguing that the Kurds should first pay for the 250,000 barrels a day they have failed to export from November up to now, Mr. al-Mutlaq said.

The central government in Baghdad has made one payment to companies, but Iraqi officials said last year that they wouldn't pay oil firms a second portion because the Kurdistan Regional Government has failed to reach agreed production under an agreement reached in September.

The KRG further annoyed Baghdad when it started unilateral exports of more than 15,000 barrels a day of oil and condensate via trucks to Turkey at the beginning of January and pledged to increase them gradually. The Kurds also plan to set up their own export pipeline away from the Baghdad-controlled one.

Baghdad paid some IQD650 billion last year to companies but decided to suspend payment of another portion of IQD350 billion because the Kurds suspended exports.

The KRG and Baghdad are locked in a dispute over who should control oil in the Kurdistan region. Baghdad considers scores of oil deals signed with companies, such as Exxon Mobil Corp., Total SA, Gazprom Neft, DNO International ASA and Genel Energy PLC, as null and void because they haven't been approved by the central government, while the Kurds argue that they are legal according to the new constitution.

Copyright (c) 2012 Dow Jones & Company, Inc.


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