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Iraq cuts oil product supplies to Kurdish region by 50 percent
Iraq cuts oil product supplies to Kurdish region by 50 percent
05 Sep 2010 16:06:59 GMT
Source: Reuters
*Cuts some fuel supplies to Kurds by 50 percent *Response to Kurdish fuel sales to Iran By Ahmed RasheedBAGHDAD, Sept 5 (Reuters) - Iraq's Oil Ministry has cut supplies ofsome fuel products to the northern Kurdish region by 50 percent inresponse to the Kurds selling what they say is excess kerosene, fuelwaste and naptha to Iran, officials said. The move threatened toaggravate already tense relations between Iraq's minority Kurds and theArab-led government in Baghdad, at a time when U.S. forces which haveacted as a buffer between the two since the 2003 invasion are startingto leave. The decision to cut supplies to the semi-autonomousKurdish Regional Government was ordered by Oil Minister Hussainal-Shahristani, Oil Ministry documents obtained by Reuters showed."Based on instructions from the oil minister, it was decided to cut theallocation of kerosene and diesel fuel sent to provinces in the Kurdishregion by 50 percent until further notice," one document said.An Oil Ministry official who declined to be named said the decision wastaken in response to an acknowledgement last month by Kurdish naturalresources minister Ashti Hawrami that the region was selling surplus oilproducts to private companies. Those private companies wereexporting the products through neighbouring Iran, a challenge to U.S.efforts to impose sanctions on Iran. The exports have put further strains on Kurd-Arab relations.Shahristani has said any exports of crude oil would be illegal becausethe law only allows the State Oil Marketing Organisation to sell crudeabroad. But he has also complained about the resale of refined productsbecause Iraq does not produce enough to be self-sufficient and has toimport. NEW OIL FIELDS "The Kurdish regional government isallowing the illegal export of refined products to take place while thefederal government has to spend millions importing refined fuelsbecause of a shortfall," the Oil Ministry official said. Kurdishofficials condemned the decision to restrict kerosene and dieselsupplies to their region, and said they would make every effort toensure fuel prices did not rise. "The decision to cut fuelsupplies is unjust and we will do our best to stop any negativeimplications," Serwan Abu Bakir, a senior official at the Kurdishnatural resources ministry, told Reuters on Sunday. IraqiKurdistan and Baghdad have been at loggerheads for months over oil dealsthe Kurds signed independently with foreign firms. The Arab-ledgovernment in Baghdad refuses to pay the firms, and oil exports fromKurdistan stopped last year. Baghdad's hand has been strengthenedby a series of deals to develop oilfields outside the Kurdish regionthat could turn Iraq into one of the world's top three crude producers.That has made the government feel less dependent on potential revenuesfrom the export of Kurdish oil.