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Iraq Government, Kurdistan Reach Oil Deal

  • VOA News

FILE - Iraqi Prime Minister Haider al-Abadi is seen speaking to the media.

FILE - Iraqi Prime Minister Haider al-Abadi is seen speaking to the media.

Iraq's government and autonomous Kurdish regional authorities reached a formal agreement on Tuesday to end a longstanding dispute over oil exports and budget payments.

Under a deal due to take effect at the start of 2015, the two sides agreed to the export of 300,000 barrels per day (bpd) of oil from Kirkuk and 250,000 bpd from the northern Kurdish region through Turkey, said Hoshiyar Zebari, Iraq’s finance minister.

Zebari, a Kurd who is part of the Baghdad government, said oil from both areas would run through a Kurdish Regional Government's (KRG) pipeline to Turkey.

But the crude will be sold by Iraq's state oil marketing organisation (SOMO), Reuters reported. The agreement represents a compromise by the Kurds, who have long insisted the constitution entitles them to sell oil on their own terms.

Zebari described the deal as a win-win for both parties, saying it would help increase Iraq’s oil exports. The country’s budget is being battered by both low oil prices as well as a war against Islamic State militants, who have taken control of large swathes of the country.

Iraqi Prime Minister Haider al-Abadi's office said the deal was approved during a cabinet meeting, which Kurdish Prime Minister Nechirvan Barzani also attended.

As part of the deal, the federal government would resume payments to the Kurdish region of 17 percent of the state budget. For more than a year, Baghdad had not sent revenue payments to the Kurdistan region, in retaliation for Irbil's efforts to export oil unilaterally.

Additionally, Iraq said it would pay $1 billion toward salaries and equipment of the Kurdish peshmerga forces fighting alongside the Iraqi army against Islamic State militants.

"The deal was reached today and endorsed by the Iraqi cabinet. Now it's a done deal," Zebari said Tuesday.

Material for this report came from Reuters and AFP.