The move sets up semi-autonomous Kurdistan to continue independent oil sales, which it has increased since mid-June while cutting allocations to Iraq’s state oil firm SOMO in an escalating dispute over export rights and budget payments.
The region’s natural resources ministry said in a statement the allocations would begin in September and could increase in early 2016 as exports rise.
“The federal government has to date been unable to provide the Kurdistan Region with its monthly budgetary dues. As a result, the KRG has been obliged to introduce direct crude oil sales,” the statement said.
Shares in international oil companies jumped on the news, with Gulf Keystone up nearly 19 percent and Genel Energy up almost 13 percent. Norway’s DNO closed up 13 percent.
Jon Ferrier, chief executive of Gulf Keystone, welcomed the KRG’s decision in an emailed statement, calling it “a further important step towards the establishment of a regular payment cycle” for sales from the Shaikan field it operates in the KRG.
The KRG said it remained determined to build on a 2015 budget deal with Baghdad under which it agreed to transfer up to 550,000 barrels per day to SOMO in exchange for Baghdad granting Erbil 17 percent of the country’s budget payments.
It said direct crude sales via the Turkish port of Ceyhan, which have amounted to at least 12 million barrels since mid-June according to shipping data and traders, were below Kurdistan’s share of the federal budget but higher than the monthly allocation it had received from Baghdad.
The KRG said it would continue to facilitate oil exports from state-operated fields in Kirkuk via its pipeline network to Turkey.