Iraq draft budget intensifies Kurd oil export row

BAGHDAD Wed Jan 15, 2014 12:09pm EST

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BAGHDAD Jan 15 (Reuters) - Iraqi Kurdish ministers walked out of a cabinet session on Wednesday in protest at the country's draft 2014 budget, further complicating a feud over the autonomous region's plans to export crude via a new pipeline to Turkey.

The Kurdistan Regional Government (KRG) said last week that crude had begun to flow through the pipeline, and exports were on track to start at the end of January, inviting bidders to register with the Kurdistan Oil Marketing Organisation (KOMO).

Baghdad rejected that as a violation of the constitution and on Wednesday reiterated that Iraq's State Oil Marketing Organisation (SOMO) had exclusive rights to sell crude from Kurdistan and the rest of the country.

The draft budget requires the Kurds to export 400,000 barrels per day (bpd) -- well above the region's current export capacity -- and says Baghdad will deduct any shortfall from the 17 percent share of state revenues to which they are entitled.

The budget has yet to be voted on by parliament and could undergo some changes, but Kurdish lawmakers said the draft sent the wrong signal ahead of planned negotiations over the oil revenue dispute.

"It's certainly a negative message Baghdad is sending by adopting the budget without agreement from the KRG," said lawmaker Rawaz Khoshnaw. "The Iraqi government should have given more time for talks and negotiation with the KRG."

Kurdish members of parliament boycotted last year's budget, but it passed nonetheless.

A delegation led by Kurdish Prime Minister Nechirvan Barzani was due to visit Baghdad for talks to ease the dispute, which is rooted in disagreement over how to exploit Iraq's vast oil resources and share the proceeds.

Kurdistan used to export crude to Turkey through a pipeline controlled by Baghdad, but exports via that channel dried up one year ago due to a row over payments for companies operating in the northern enclave.

Since then, the Kurds have been trucking smaller quantities of crude to Turkey and collecting the revenues directly, whilst laying their own independent pipeline, which was completed late last year.

Iraqi Prime Minister Nuri al-Maliki said the government had long since prepared the budget, estimated at 174.6 trillion dinars ($150.12 billion), blaming the Kurds for holding it up. (Reporting by Raheem Salman, Ahmed Rasheed and Isabel Coles; Editing by Mike Collett-White)

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