Kurds ready for billion-dollar oil deal with Baghdad

Iraq's Kurds are ready to strike an agreement with the central government in Baghdad on a deal to increase oil exports, if it guarantees them a monthly revenue of $1 billion, a spokesman for the Kurdistan Regional Government (KRG) has said.

In an interview in the Iraqi-Kurdish capital city of Erbil on Tuesday, KRG spokesman Safeen Diyazee told Reuters that Kurdish authorities would be willing to sell the oil through Baghdad if they were to receive a share from the federal budget amounting to a $1 billion a month.

"If Baghdad comes and says ok, give me all the oil that you have and I'll give you the 17 percent, as per the budget, which equals to one billion, I think, logically it should be the thing to accept," he said, specifying later that the amount referred to a monthly payment in dollars.

"Whether this oil goes to the international market or first to Baghdad and then to the market, it doesn't make any difference," he added.

"We are ready to enter dialogue with Baghdad."

In March, Iraq's central government stopped oil exports through a Kurdish pipeline to pressure local authorities to resume talks about an oil revenue-sharing agreement.

Iraq's state-run North Oil Company normally exported 150,000 barrels a day through the pipeline that comes out at the Mediterranean port of Ceyhan, in Turkey.

If Baghdad comes and says ok, give me all the oil that you have and I'll give you the 17 percent as per the budget, which equals to one billion, I think, logically it should be the thing to accept. - Safeen Diyazee

The pipeline also carries oil produced in the Kurdish region in northern Iraq, which is sold independently from the central government, leading to tension with Baghdad.

The KRG stopped delivering crude oil to the central government a year ago, a decision taken when Baghdad's payment to the autonomous region fell under $400 million a month, according to Dizayee.

The Kurdish region exported an average of 513,041 barrels in May through the pipeline to Turkey, generating about $391 million for the month, of which about $75 million was paid to the crude-producing companies, according to KRG official estimates.

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"The companies have been assured that certain amounts will be made on a monthly basis," said Dizayee, referring to the three foreign oil producers in the KRG region - DNO, Gulf Keystone and Genel.

"We have started to pay some of it, at least it has rebuilt that confidence between the government and the IPCs [oil companies]".

In February, the KRG said it would be paying international oil companies in 2016 according to the terms of their contracts, after making ad-hoc payments last year.

Foreign operators have been reluctant to invest and further develop assets in the region without the promise of regular payment, while the cash-strapped KRG needs production to increase as it struggles to avert economic collapse.