Baghdad and Erbil are close to folding oil disputes … and a gas deal in sight
Shafaq News / The Iraqi Federal Government and the Kurdistan Regional Government are close to turning the page on their differences over the oil file, which is one of the outstanding issues for many years, but both sides are heading to conclude a new agreement to invest gas in fields in the region.
The first steps of convergence began late in the year, when the two sides reached an agreement on Iraq’s financial budget for 2020, which included delivering the Kurdistan Region 250,000 barrels per day of crude oil to the federal government in exchange for guaranteeing the salaries of employees, peshmerga, and the region’s share of about 13 percent.
During the past few period, the two sides held extensive discussions in the Iraqi capital, Baghdad, on the outstanding differences between them in the oil file and coordination between them regarding the “OPEC +” agreement to reduce production.
The two governments reached an agreement to honor each other’s share of the production cut agreement, as well as exchange information on production to give more transparency to this file.
Unlike the oil file, the two sides are heading to conclude an agreement to invest gas in fields in the Kurdistan Region in an effort to secure fuel for power plants throughout the country.
In this regard, the federal government submitted a proposal to the regional government recently that the two sides continue to discuss this file in a visit by a delegation from Baghdad in the coming period, in preparation for the conclusion of a final agreement.
This convergence comes in the midst of the Corona pandemic crisis, which warns the data that it will cause a financial crisis in Iraq due to the collapse of oil prices to less than 20 dollars per barrel, noting that Iraq relies on revenue from the sale of crude to finance about 95 percent of the country’s expenditures.
And the former deputy in the Iraqi parliament, a member of the Kurdistan Democratic Party, Ashwaq Al-Jaf, told Shafaq News, “This stage is the stage of dialogue, and of course, the legal and constitutional dialogue is the solution to all outstanding issues between Baghdad and Erbil.”
She pointed out that, “According to the preliminary information, there will also be mutual visits by a delegation from the federal government to the Kurdistan Region and vice versa to complete the dialogue and discussion on the gas agreement, and it will be of benefit to all Iraqi people.”
And it turned out that “in the previous periods (in the second and third cycle), there was interference by some in the files between the governments of Baghdad and Erbil in order to create problems, and there was no language of dialogue followed, but there was a response by the federal government through data And media statements. ”
The outstanding differences between Baghdad and Erbil date back to many years, that is, throughout the period after the fall of the previous Iraqi regime in 2003, when the two parties were unable to overcome them despite many rounds of discussions.
However, the differences were exacerbated in an unprecedented way during the second term of Prime Minister Nuri al-Maliki (2010-2014), as he cut the Kurdistan Region’s share of the federal budget in 2014 in protest against the region’s plans to develop oil fields.
The region’s share of the federal budget continued to be withheld throughout the life of Haider al-Abadi’s government (2014-2018).
“Since the formation of the Adel Abdul Mahdi government, there have been quiet steps, according to a legal constitutional dialogue, to resolve all outstanding issues, away from the media escalation, and this is the correct method, which should have been followed many years ago,” Jaff said.
She adds that “any agreement between Baghdad and Erbil in the oil and gas files is being developed according to a law as well as the parliament voting on it, but the problem will be with the escalation of the voices of some political parties.”
She noted that “there is no problem between the two governments, and these votes are from politicians by chance, who refer to gathering votes for the elections, they are behind the confusion over the two governments, otherwise the two governments agree according to a formula that they set according to the budget law, and the Iraqi parliament votes on them, and if there is a problem between Baghdad and Erbil, so why do they agree on something so that the government puts it in the draft budget and sends it to parliament.
Al-Jaf believes that “the government of Adel Abdul-Mahdi was devoting its time to resolving the outstanding issues with the Kurdistan Regional Government in accordance with the constitutional framework, and did not allocate any time to the votes that are trying to create problems, and here the government is conserving the right of the Iraqi people and preserving the application of the law, away from any escalation Notify me. ”
And the member of the Kurdistan Democratic Party continues, “The federal government has a competent ministry to conclude any agreement on oil or gas, as well as it has experts in this field, and for this discussion is ongoing and will be completed on the gas agreement, in the next mutual visits of the two parties so that there is an agreement in accordance with the constitution and in the interest of all the Iraqian people”.
The differences between Baghdad and the region, over the past years, prevented the passing of a law regulating the management of oil and gas in the country.
However, things began to move toward a solution gradually since last year, which will make the conclusion of the gas agreement between the two parties easy compared to the oil file.
Iraqi oil expert Sadiq al-Rikabi told Shafak News that “the gas agreement between Baghdad and Erbil will be easier than agreeing on oil, especially since the two parties are going through a common ordeal of declining revenues, declining capital spending by oil companies and the absence of global demand.”
And Al-Rikabi said, “The agreement on gas between Baghdad and Erbil, because Iraq wants to benefit from electrical energy, without there being import of gas from abroad, and this saves revenues and makes the agreement between Baghdad and Erbil to invest the discovered and untapped fields easy, especially since there are discovered fields. Recently, but it is underutilized. ”
He stressed that “this field will be working in it, during the next few months, and it is a common interest for Baghdad and Erbil, especially that it will have a reduction in the agreement due to importing gas from abroad, and increasing the capacity of electrical energy.”
The Iraqi oil expert added, “This agreement provides financial revenues for the federal government, which helps both parties, to provide funds to pay the salaries of employees, build infrastructure, and finance the federal budget, and helps the federal government and the regional government to reduce the negative economic impact due to the decline in demand for oil prices, This agreement has a mutual interest for both parties. ”