Iraqi Kurdistan’s Oil Exports Halted Over Pay Dispute

Tensions between Baghdad and the Kurdish region have risen since October last year when Exxon Mobil announced a deal to explore for oil in Kurdistan.

Iraq’s autonomous Kurdistan region halted its oil exports on Sunday, accusing the central government in Baghdad of failing to make payments to companies working there in the latest clash in their long-running dispute over oil rights.

The friction between Iraq’s government and Kurdish region, autonomous since 1991 with its own government and armed forces, centers on control of oilfields and revenues in the north, and has already trimmed payments to producers like Norway’s DNO.

“After consultation with the producing companies, the ministry has reluctantly decided to halt exports until further notice,” Kurdistan’s Ministry of Natural Resources said in a statement.

“There have been no payments for 10 months nor any indication from the federal authorities that payments are forthcoming,” it said.

Officials from Iraq’s oil ministry could not immediately be reached for comment. But Baghdad says it has approved payment of close to $560 million to oil producers in the Kurdish region once it completes final audits.

The KRG said last week it had reduced oil exports to 50,000 barrels per day over the payment dispute. Iraq’s government says it receives on average 70,000 to 75,000 bpd from Kurdistan, but says it only received 65,000 bpd since the start of the year.

Tensions between Baghdad and the Kurdish region have risen since October last year when Exxon Mobil announced a deal to explore for oil in Kurdistan. Baghdad dismissed the accord as illegal, and warned the U.S. oil giant could risk its agreements with the central government, reported by Reuters.