Baghdad-Erbil Refining Deal Signals Pragmatism Winning Out

24 Feb 2017 Issue: 60 / 8

Baghdad appears to have put pragmatism before politics in a deal to process federal crude in a Kurdish refinery. Both sides will benefit but it provides more ammunition to the prime minister’s opponents. A subsequent MoU with Iran looks to be political show rather than anything meaningful.

Iraq’s Minister of Oil Jabbar al-Luaibi this week announced an unexpected agreement with Erbil-based Kar for the processing of 40,000 b/d of crude oil from federally-controlled fields at the company’s 100,000 b/d Kalak refinery 50km northwest of Erbil, capital of the Kurdistan Regional Government (KRG).

Mr Luaibi says the agreement will allow the production of badly needed fuels for the Nineveh, Kirkuk and Diyala provinces. These include areas liberated from Islamic State (IS) jihadists. Iraq has suffered acute products shortages since IS badly damaged the 310,000 b/d Baiji refinery in June 2014. Baiji may well never come back online, and with the smaller Qayara and Kasak plants also offline, war damage has reduced capacity by 334,000 b/d to just 566,000 b/d. (CONTINUED - 1630 WORDS)