Iraqi Government Begins Payments to Kurdistan Region for Oil

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Iraq's Finance Ministry has begun making an initial payment of $650 million to Iraqi Kurdistan for oil companies working in the autonomous region, Deputy Prime Minister Rosh Nuri al-Shawish said. The central government in Baghdad and the semi-autonomus, Arbil-based Iraqi Kurdistan government (KRG) resolved the payment issue on September 14.

Iraqi Kurdistan halted its exports of 200,000 barrels of oil per day via the federal government on April 1. The regional government cited $1.5 billion it said is owed to foreign oil companies working in the region, but that Baghdad allegedly has withheld. But Iraqi Kurdistan resumed shipments on August 7, in what was billed as a confidence-building measure.

The Kurdish government had said it was planning to raise production to 200,000 barrels of oil equivalent per day, and more production was expected for 2013.

Baghdad 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.

Washington warned energy companies of risks associated with working in Iraq, given political tensions between the KRG and Baghdad. Baghdad blacklisted some companies for landing unilateral deals with the KRG.

The region is also to receive 17% of the oil refined in Iraq, and 17% of the crude supplied to federal government power plants. The two sides also agreed to establish a committee of representatives from the Iraqi and Kurdistan governments to track the amount of oil produced and refined, and keep note of remunerations for the companies working in the region.

Tensions between Baghdad and the KRG have risen since last year, when U.S. energy giant Exxon Mobil (NYSE:XOM) (Houston, Texas) announced a deal with the KRG to explore for oil in Kurdistan. Recently, companies such as Total S.A. (NYSE:TOT) (Paris, France), Chevron (NYSE:CVX) (Houston) and Gazprom Neft (Moscow, Russia) have followed Exxon in defying Baghdad and signing deals with the Kurds.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.