UPDATE 2-Iraq's Kurdish region threatens oil export halt
Mon, Mar 26 2012
* Oil exports from the north drop to 50,000 bpd
* KRG says central govt owes $1.5 mln
* Long-standing Baghdad-Arbil dispute over control of oil (Adds details, background)
By Serena Chaudhry
BAGHDAD, March 26 (Reuters) - Iraq's Kurdistan regional government (KRG) on Monday threatened to stop oil exports in a month if Baghdad continues to withhold payment from producers, the latest clash in a long-running feud over control of the region's oil.
Iraq's central government maintains that it alone has the right to export oil, while authorities in the autonomous northern Kurdistan zone with its own government and armed forces say they should have control of oil in their region.
The dispute over control of Kurdistan's oil revenues has throttled payments to producers in the north, such as Norway's DNO, and helped keep most major oil companies out of the Kurdish region for now.
A spokesman for the regional government's natural resources ministry, or MNR, said it had decided to reduce exports to 50,000 barrels per day because of a lack of payment from Baghdad. Iraq's central government owes the KRG almost $1.5 million, he said.
"Because of the production costs and the re-investments needed by the producing companies in the region, the MNR has reluctantly decided to reduce exports to 50,000 bpd, with a view to possible cessation in one month unless payments are forthcoming," the MNR spokesman said in a statement.
An official for the central government did not immediately respond to a request for comment.
Tensions between Baghdad and the KRG over oil have been high since October, when Exxon Mobil announced a Kurdish exploration deal that the central government deemed illegal. Exxon was banned from bidding on new oil contracts by Baghdad.
At the heart of the dispute is the lack of a national oil law to govern the distribution of oil revenues. The new draft oil and gas law, seen as crucial to the success of Iraq's rapidly developing oil sector, has been delayed for years.
MORE OIL EXPORTS
Iraqi Oil Minister Abdul Kareem Luaibi said earlier this month that central authorities had only received 65,000 barrels per day (bpd) of oil - less than half of the 175,000 bpd expected - from the Kurdish region since the start of the year.
The KRG official said the region could export "significantly more" oil if Baghdad kept its commitment to payments. The spokesman said only two payments totalling $514 million had been received, with the last payment made in May 2011.
As much as a third of the oil extracted in northern Iraq is refined locally for domestic use, partly due to late payments from Baghdad for crude pumped into the major pipeline to Turkey and partly because it reduces the costs of producers.
The central authorities say they suspect that missing Kurdish oil is being illegally exported abroad.
Iraq has some of the world's largest oil reserves and Baghdad has signed multibillion-dollar contracts with global oil majors, despite its antiquated legal safeguards.