Better Baghdad-KRG relations?

Published at 07:00 15 Sep 2012 by . Last edited 11:17 22 Aug 2019.

​An agreement between Baghdad and the Kurdistan Regional Government (KRG), announced 13 September 2012, should result in crude production in the region remaining at 140 thousand b/d this month and rising to 200 thousand b/d for the rest of the year. While the agreement is a step in the right direction, key obstacles remain to a stable deal between Baghdad and the KRG. Ultimately, the central premise of Baghdad's strategy is that eventually the companies investing in the north will need to be paid; meanwhile, the central Government controls the country's pipelines, and claims the exclusive rights to export and sell oil. Our view is that despite the recent positive trends in Iraqi oil production, which climbed above 3 mb/d in late Q2, there is still a long way to go with regards to shaping the country's oil industry, in which the KRG will have to play a key role. Moreover, recent months have seen a significant upsurge in sectarian violence, which is thought to largely be the work of Sunni insurgents whose aim is to topple the Shia Prime Minister. Two attacks on Iraq's crude export pipeline to Turkey, in late July and early August, have been attributed to the Kurdistan Workers Party (PKK), and very briefly curtailed the country's exports via this route.

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