Kurds to invite oil bids in defiance of Baghdad

The Kurdistan Regional Government (KRG) has clashed with Baghdad after being instructed to accept severe budget cuts. It has shipped its oil production to Turkey despite a ban on exports imposed by Baghdad, which claims its oil ministry must approve all sales and exports.

"Oil sales will start on Friday," said Bayan Sami Abdul Rahman, high representative of the KRG to the UK. "We have 1.5m barrels of oil in Turkey that we will put on the market and sell. Baghdad is using the budget to control and punish the Kurdish region."

Kurdistan currently produces approximately 200,000 barrels per day (bpd) but analysts at Bernstein believe its output can rise to 2m bpd by 2020, and reach total exports of 1m bpd.

Crude output from the KRG oilfields has been accumulating in tanks at the Turkish Mediterranean oil hub of Ceyhan.

Taner Yildiz, the Turkish oil minister said the one million plus barrels at the port were being held "in the name of Iraq" but refused to answer questions on whether a formal agreement with Baghdad would be needed to authorise sales.

Turkey maintains it is hoping for an agreement between Baghdad and Erbil over the $2.5bn (£1.5bn) that the KRG believes it is owed from the central government budget. Yildiz said he had invited Iraq's deputy prime minister with responsibility for energy Hussain al-Shahristani and oil minister Abdul Karim Luaibi to a conference in Ankara next month.

The oil comes onto the market at a time when some analysts are warning of over supply. Baghdad is pushing forward with an ambitious plan to boost its production to 9m bpd of oil by the end of the decade.

more