The seemingly interminable struggle between the federal government and the KRG over who has control of Iraq’s energy resources, rumbles on with little sign of a breakthrough. In a reflection of the Kurds’ desperation to get things back on track and to bring some revenue into KRG’s coffers, this month saw Erbil make an indirect offer to the federal government. KRG spokesman Safeen Dizayee told the media that Erbil was ready to sell its oil through the national State Oil Marketing Organisation (Somo) provided it receives its proper 17% share of the federal budget. “If Baghdad comes and says OK, give me all the oil that you have and I’ll give you the 17% as per the budget, which equals US$1 billion, I think, logically it should be the thing to accept,” Dizayee told Reuters. He continued, “Whether this oil goes to the international market or first to Baghdad and then to the market, it doesn’t make any difference … We are ready to enter dialogue with Baghdad.”

But Baghdad has not responded and there is little indication that it is ready to resume the oil agreement it struck with Erbil at the end of 2014 under which the Kurds agreed to export 550,000 b/d via the central government in return for receiving their full budget share.

There are few indications either that the federal government is willing to restart exports from the Kirkuk fields run by North Oil Company (NOC) and exported through the KRG. These fields produce between 50,000 b/d and 200,000 b/d, while the oil fields in Kirkuk governorate that are run by the KRG produce 220,000 b/d.
In March the Iraqi Oil Ministry had ordered NOC to stop pumping crude from the fields that it operates inside the governorate to pressure Erbil into meeting the terms of the oil agreement.

This halt in exports, combined with IS attacks on energy infrastructure in Kirkuk, have lost Iraq an estimated US$200 million in income since the start of 2016. Some Iraqis, such as analyst Omar al-Bakri, also believe that there are what they describe as “Iraqi oil mafias” bleeding the oil fields in Kirkuk as part of corruption rackets.

This situation has infuriated locals in Kirkuk who have accused the federal government of being complacent about protecting the governorate’s resources. Ahmed al-Askeri, head of energy and minerals in the Kirkuk governorate council, told the local media this month, “IS is involved in all the attacks that have targeted the oil fields. There is a clear lack of effort by the Iraqi government to secure the oil and gas fields … The interior ministry could easily open the door to the establishment of a force made up Kirkuk inhabitants that could protect the oil fields because the oil police don’t have sufficient numbers or cars to be able to secure the oil facilities.”