KRG begins implementing budget law with crude transfers to Baghdad

SULAIMANIYA - Erbil and Baghdad are taking initial steps towards implementing an aspect of the 2023 budget law, in a sign of cooperation that could potentially lead to more stable financial flows for the Kurdistan Regional Government (KRG) and its oil contractors.

For the past month, the KRG has been handing over between 50,000 to 90,000 barrels per day (bpd) of crude to the federal Oil Ministry, which is paying a private refinery in Erbil to produce fuel, according to multiple industry officials, KRG officials, and MPs briefed on Baghdad-Erbil negotiations.

The oil transfers signal Erbil's willingness to comply with the terms of the 2023 budget law, passed in June, which compels the KRG to hand over 400,000 bpd of crude to Baghdad in order to qualify for a share of the federal budget.

It remains to be seen whether the oil transfers will trigger a federal budget transfer to the KRG in July, and if so, how large it will be.