On Sunday, oil export from Kurdistan Region dropped significantly and Iraqi Prime Minister, Nuri al-Maliki's adviser on Kurdish affairs told Reuters "the stoppage was a reaction to central government approving a new oil and gas law without consulting Kurdish leaders". A few hours later the KRG(Kurdistan Regional Government) said in a statement that" the Ministry of Natural Resources of the KRG would like to state that there has been no policy decision for suspending oil exports from Kurdistan via the Iraq-Turkey pipeline". Furthermore, the KRG added, "there have been a number of technical difficulties resulting from the management of the pipeline and the pumping export system ...".
As the 46 oil and gas companies set to take part in Iraq's next oil and gas auction round in January were about to get the first glimpse of the contracts on offer in Amman-Jordan, the airwaves were filled with the news that oil production from Kurdistan Region has been halted. Iraqi officials including the oil minister were quick to jump into conclusion that the reduction was motivated by politics rather than technical difficulties.
While in Amman and trying to attract IOCs (International Oil Companies), by promoting Iraq's oil and gas contracts for January 2012 bid, Iraqi oil minister, Abdul-Kareem Luaibi's ineptitude was on show for everyone to see. Luaibi was trying to score a quick political point by accusing the KRG of playing politics with oil exports but was proved wrong by the Kurdish Natural resources minister, Ashti Hawrami. Hawrami did not comment but later released a statement explaining export reductions and saying; "The KRG Minister of Natural Resources has already spoken to the Oil Minister in Baghdad, and reported to him these unexpected serious problems. The Oil Minister has agreed to check it out and to have more cooperative contacts to avoid similar problems in the future".
The KRG has locked horns with Baghdad over many issues, including revenue sharing, disputed territories and Oil Law among many other issues. The KRG has backed a version of the Hydrocarbon law forwarded by the parliamentary Energy Committee, which enable KRG to have a greater say over the future of the Kurdish PSCs. However, the Iraqi Cabinet has approved its own version of the law, which infuriated Kurdish officials. Al-Maliki's Kurdish cabinet members complained that they did not get a chance to examine the amended Bill before been forwarded to parliament. The original Bill was first introduced in 2007 and yet to make it to the statute books.
As tensions are rising between Baghdad and Erbil, Kurdistan President, Mas'ud Barzani, has called a meeting for the Kurdish Bloc that will be held tomorrow in Erbil and the main theme of the discussions will be Kurdistan Region's disputes with Baghdad.
Needless to say that in the KRG previously halted exports which lasted over a year in 2009 and the same issue which resulted in suspending exports -payments to the IOCs in Kurdistan- is coming back at the forefront of the political agenda. Although the temporary halt in oil production is reported to be a technical issue and set to resume within days- Norwegian DNO already said production at Tawke field was back to around 50,000 bpd after a pipeline malfunction on Sunday- it is a remainder to Baghdad that the oil export from the northern pipeline is under the KRGs control and it can be suspended at anytime.