Economy News – Baghdad
The Ministry of Oil stressed on Sunday the importance of reaching an agreement that serves the public interest on amending the budget items on the export of oil from the Kurdistan Region, in order to achieve justice in the distribution of resources.
According to a statement reported by the Media Department of the House of Representatives, and seen by “Economy News”, “the Parliamentary Finance Committee, headed by the Chairman of the Committee, Atwan Al-Attwani, and in the presence of its members and a number of members of other parliamentary committees, hosted the Undersecretary of the Ministry of Oil for Extraction Affairs, in the name of Mohammed Khudair, the Director General of the Legal Department Salam Hamdan Dagher, the Director General of the Economic Department Alaa Al-Yasri, and the Director General of the Oil Marketing Company (SOMO) Khudair Abbas, at the committee’s headquarters, to discuss the amendment of the general budget items related to the export of oil by the region.”
At the beginning of the meeting, the chairman of the committee stressed “the importance of the meeting and the need to invest it optimally to counter any possible changes in oil prices,” stressing “the importance of amending the item on oil export in the budget to address contracts related to the cost of production.”
According to the statement, Al-Atwani pointed to “the disparity in the nature and mechanisms of oil extraction from different fields,” explaining that “the committee will submit its report to the Council for consideration. ”
The statement pointed out that “the committee raised a number of questions about the basic standards related to the cost of production, in addition to the payment of financial allocations, and the extent of compliance with the terms of the contract, with emphasis on formulating amendments that achieve fairness in the distribution of resources, through analyzing data and adapting contracts in line with national requirements.”
For his part, the Undersecretary of the Ministry of Oil reviewed the relationship between the Ministry and the Parliamentary Council to achieve the supreme interest, speaking about “the file of oil exports between the center and the region and the mechanisms for determining the operational and investment costs,” stressing “the importance of reaching an agreement that serves the public interest and achieves justice in the distribution of resources.”
The statement explained that in conclusion, the members of the committee expressed their observations on the file, stressing the need to find appropriate solutions to ensure fairness in the distribution of oil revenues, achieve economic stability and guarantee rights.”
The main obstacle to the resumption of oil exports from the Kurdistan Region is the dispute between Baghdad and international companies over the cost of oil production in the Kurdistan Region.
The contracts concluded between the Kurdistan Region and international companies set the cost of production to more than $26 per barrel, while the Iraqi Budget Law stipulates that it is limited at only $8.
To resolve this situation, the Iraqi Council of Ministers approved on November 5, 2024, the proposal to amend Article (12/II/c) of the Tripartite Budget Law, to include “compensation by the Kurdistan Regional Government of Iraq from sovereign expenditures on the cost of production and transportation.”
The proposal stipulates “compensation of the cost of production and transportation by the Federal Ministry of Finance as advances, at the rate of $16) per barrel, to be settled later” after calculating the fair specuative cost of production and transportation for each field separately.
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