Economist: Re-exporting Kurdistan oil will cause Iraq to lose $5 billion and a budget deficit
Economist: Re-exporting Kurdistan oil will cause Iraq to lose $5 billion and a budget deficit
2024-11-17
Economic expert Nabil Al-Marsoumi confirmed Saturday (November 16, 2024), that re-exporting Kurdistan oil will cause Iraq to lose $5 billion, while pointing out that it causes a budget deficit.
“APIKUR welcomed the proposal to amend Article 12 of the budget law, but believes there is enough room in the current wording to cover its previous demands on commercial terms and to ensure payments for past and future exports via the Iraq-Turkey oil pipeline,” Al-Marsoumi said in a Facebook post.
He added that “the amendment stipulates that the Federal Ministry of Finance shall compensate the Kurdistan Regional Government from sovereign expenses for the costs of production and transportation, for the quantities of oil produced in the region that are received by SOMO, or the Federal Ministry of Oil, provided that the fair estimated costs of production and transportation are calculated for each field separately, by a specialized international technical advisory body, determined by the Federal Ministry of Oil in agreement with the Ministry of Natural Resources in the region,” indicating that “the costs of production and transportation are compensated by the Federal Ministry of Finance as advances, at a rate of (16) dollars per barrel, to be settled later after the completion of the aforementioned specialized technical advisory, and retroactively from the date of commencement of delivery.”
Al-Marsoumi continued, “According to the results of Deloitte’s audit of previous years, the region only received 44% of oil revenues, and the rest was received by foreign oil companies to cover the costs of production, transportation, marketing, and profits of foreign companies specified in most contracts as 20% of the profit oil after deducting the costs amounting to 40% of the price of a barrel of oil to recover part of the costs incurred by foreign companies when investing in the oil sector in Kurdistan.”
He explained that “in light of these facts and because of Iraq’s commitment to OPEC Plus restrictions, the amount of Kurdistan’s exports, which amounts to 400,000 barrels per day, will require reducing the same amount from the central and southern fields, which will lead to a decline in oil revenues by about $5 billion annually, which means an increase in the budget deficit by the same amount due to differences in costs and profits of foreign companies and the lower quality of Kurdistan’s oil.”
He explained that “the solution lies in Iraq’s request for OPEC Plus to exempt it from the mandatory and voluntary cuts imposed on the production quota so that there is economic feasibility in re-exporting oil from Kurdistan.”
burathanews.com
