Baghdad threatens Kurds with budget cut over oil row

Reuters News
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Posted: Sep 04, 2012 8:43 AM
Baghdad threatens Kurds with budget cut over oil row

By Ahmed Rasheed

BAGHDAD (Reuters) - Iraq's central government is considering cutting federal budget payments to the country's Kurdistan by more than $3 billion to cover losses it says came from the autonomous region's oil exports, a government spokesman said on Tuesday.

Ali al-Moussawi, advisor to Prime Minister Nuri al-Maliki, said a committee found losses of more than $3 billion resulting from Kurdistan's failure to pump the amount of oil agreed in the budget, and from its recent halting of oil exports.

"In today's cabinet meeting we gave a delegation from the Kurdistan regional government a week to come to Baghdad to discuss this or we will move ahead and deduct this amount from their budget share," he said.

Kurdistan, caught in a long dispute with Baghdad over oil rights, in April halted its share of national oil exports in protest over central government payments to companies working in its region. It resumed exports at around 120,000 bpd last month, below the agreed 175,000 bpd in the budget.

Baghdad's decision comes after the Kurdish authorities decided on Saturday to continue pumping oil until September 15 to give the central government more time to settle their payment dispute.

The extension seemed to signal tensions were easing in the long-running feud over oil rights, territory and power-sharing, a dispute that is testing the country's uneasy federal union.

But Baghdad's move could further complicate relations with the Kurdish regional government, and might provoke its government to again halt exports.

"A week's deadline is the last chance for the Kurdish authorities to settle the oil exports issues and we will not give more time," Moussawi said.

Kurdistan halted exports in April, saying Baghdad had not made agreed payments to companies working there. It restarted shipments on August 7, in what it said was a goodwill gesture, with a warning they could be halted again if the payments were not made.

Iraq says Kurdistan's oil shipments have fluctuated around 100,000 to 120,000 barrels per day since they restarted, below the 175,000 bpd that Baghdad says was agreed.

(Reporting by Ahmed Rasheed; Editing by Barry Malone and William Hardy)