Iraq: Kirkuk Oil Flowing Fast, But Locals Never See Any Money

Shalaw Mohammed (Niqash)
The province of Kirkuk exports millions of barrels of oil per month. But nobody knows where the money is going – and as a result, local protesters say they will try to stop oil exports soon.
28.01.2016  |  Kirkuk
Bai Hassan field in Kirkuk. (photo: شالاو محمد)

Bai Hassan field in Kirkuk. (photo: شالاو محمد)

The northern city of Kirkuk and its surrounds are well known for their oil producing abilities. And locals know that thousands of barrels of oil are being extracted and exported from their area. But nobody seems to be seeing any kind of revenues from that oil.

The Kirkuk authorities say they have received none of Iraq’s “petrodollars” for almost two and a half years.

This is how the system should work: An agreement between Baghdad and the semi-autonomous northern region of Iraqi Kurdistan says that the Kurdish should send their oil, and the oil from Kirkuk, through the Kirkuk-Ceyhan pipeline, which transports crude from Iraqi Kurdistan to Turkey. Revenues from these exports are supposed to go to Iraq’s central State Organization for Marketing of Oil, or SOMO, and from there it should be distributed back to Iraqi Kurdistan and other provinces, as a portion of the federal budget. In Iraqi Kurdistan’s case it is supposed to be 17 percent of the federal budget.

However this has not been happening in the agreed upon way for some time now.

“Kirkuk isn’t receiving its fair share because of the ongoing conflicts between Erbil and Baghdad,” says Ahmed al-Askari, a Kurdish member of the provincial council in Kirkuk who also heads the council’s oil and gas committee. “We are not happy about this or about the Iraqi Kurdish policies on this. We don’t know how much oil is being exported and we know that Baghdad isn’t giving Kirkuk its rightful share of the federal budget. For some of 2013 and all of 2014 Baghdad didn’t send us any money. In 2015 Kirkuk’s oil was sold directly by the Iraqi Kurdish government. Neither group of authorities is telling us who has our oil money,” he complains.

“Over the past two and half years, Kirkuk has fallen into debt to the tune of between a trillion (around US$766 million) and 100 million Iraqi dinars (around US$76,000),” says Jamal Mawloud, the head of the provisional council’s financial committee. “If the governments in Baghdad and Kurdistan don’t send us our budget, this financial crisis will continue on into 2016.”

In Kirkuk province there are five oil fields – the Jambour, Khabaza and Baba Gurgur fields, which are controlled by Iraq’s own North Oil company, part of the Iraqi Ministry of Oil and headquartered in Kirkuk, and the other two fields – Bai Hassan and  Havana – which are run by Iraqi Kurdistan’s Ministry of Natural Resources.

According to figures published by various government bodies, Kirkuk province exports around 340,000 to 400,000 barrels of oil per day.

“The citizens of Kirkuk have been following up on Kirkuk’s provincial budget,” one official at the Ministry of Natural resources told NIQASH, on condition of anonymity because he was not allowed to comment on the matter. “They are accusing everyone involved – the central government, the regional government and the governor of Kirkuk – of hiding the facts. These bodies have control of the oil and the budget and nobody knows anything about where the revenues are going.”

“The central government, the Iraqi Kurdish government and the governor of Kirkuk have all refused to respond to our enquiries about revenues coming from Kirkuk’s oil,” says Adham Juma, a member of new civilian action group on oil that founded two months ago. “That’s why citizens here believe that there is actually a secret agreement not to talk about Kirkuk’s oil money.”

“We have given the governor some time to come back to us with further information,” Juma continued. “If he does not clarify this, we will start organizing demonstrations and we are also going to try and impede the export of Kirkuk’s oil.”

NIQASH also tried to contact Kirkuk’s governor, Najmiddin Karim, but his office did not return the calls.

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