KRG bypasses federal government for oil exports

Kurdistan Regional Government (KRG) Minister of Natural Resources Ashti Hawrami has detailed, for the first time, how the semi-autonomous region managed to bypass the federal Iraqi government to get its oil to global markets in 2014.

Ashti Hawrami told Reuters the KRG passed oil through Israel and transferred between ships off the coast of Malta, to avoid detection by the Iraqi government. Decoy ships were also used. He added that the region planned to sell more oil regardless of mandates of the federal government.

The Iraqi government’s allocation for the KRG in 2014 was short of their request by $500 million-700 million with further delays and cuts, according to Hawrami, which resulted in the region’s initiative to sell oil to global markets.

Slumping oil prices and lack of infrastructure at the time also made the central government’s stipulation of a 400,000-barrels-of-oil-per-day export volume unfeasible, causing further distress for the KRG.

The Iraqi government threatens to sue importers of Kurdish oil, as increased revenues for the region strengthens its hand at secession. Independent oil sales generate $800,000-850,000 per month for the KRG, despite losses caused by Iraqi intervention and re-routes to disguise the origin of the oil.

Oil revenues are critical for the Kurdistan Region of Iraq’s development and defence budgets, as it fights against Islamic State militants and supports the inflow of Syrian refugees.

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