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Economy News - Baghdad
Trade sources told Reuters that the suspension of oil exports from Iraqi Kurdistan is stopping the payment of $6 billion in oil shipments owed by the semi-autonomous Iraqi region to energy companies including Vitol and Petraco.
The export of 450,000 barrels of oil per day from Iraqi Kurdistan to the Turkish Mediterranean port of Ceyhan was suspended on Saturday after Iraq won an arbitration case in which it said Turkey had violated an agreement by allowing Iraqi Kurdistan to export oil without Baghdad's approval.
The suspension means that Iraqi Kurdistan cannot meet obligations for crude oil supplies, and no alternative plans have been developed.
Three trade sources said the region owes Vitol and smaller rival Petraco between $750 million and $800 million each. The sources estimated the total debts of Iraqi Kurdistan to companies that paid in advance for crude oil before the suspension of exports at about six billion dollars. Both companies declined to comment. The regional government declined to comment.
After the court ruling, the government in Iraqi Kurdistan said that a delegation would visit Baghdad soon to resolve these issues.
An Iraqi government spokesman declined to comment on the debt.
"Let us succeed in finding a way out of the problem of oil exports, and then we can solve the other problems under less pressure," he said.
The suspension sent oil prices soaring, as exports from Iraqi Kurdistan account for about half a percent of global oil supplies and are an important source of crude for refineries in the Mediterranean. Some oil companies began shutting down production in Iraqi Kurdistan this week.
Over the past decade, the region has been able to increase oil exports independently of Baghdad, with commercial companies providing billions of dollars in loans to the region in exchange for crude shipments, and the region has also built a new pipeline to Turkey.
Iraqi Kurdistan held a referendum on independence in 2017, but the interventions of the United States and Iran prevented the goal of complete separation from Baghdad from being achieved.
A legal adviser at the Iraqi Oil Ministry familiar with discussions with Iraqi Kurdistan said Baghdad wanted to manage oil exports through its state oil marketing company (SOMO) and wanted oil sales revenues to be deposited in a separate bank account.
And the consultant conveyed previous proposals that the account be under the control of the regional government and supervised by Baghdad, and that it fulfills multiple purposes, including debt repayment.
"We (the central government in Baghdad) are not ready to pay billions of dollars in debt for deals that we were not aware of or that we are not a party to," the adviser said.
Another official in the Iraqi Oil Ministry said that no progress had been made so far on the debt issue.
Iraq, the second largest producer in the Organization of the Petroleum Exporting Countries (OPEC), exports the lion's share of its oil from ports in the south of the country on the Gulf.
Added 03/31/2023 - 4:39 PM
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