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Iraqi Finance Committee Resumes Discussions to Amend Oil Costs in Kurdistan Budget, Warns of Increased Deficit

2025-01-28T09:40:17+00:00

The Finance Committee in the Iraqi Council of Representatives has announced the upcoming resumption of meetings to deliberate on amendments to Article 12 of the General Budget Law. This decision comes amidst concerns that rising extraction costs for oil from the Kurdistan Region could exacerbate the public budget deficit.

The Committee is poised to address the specific clause concerning the cost of oil production in the Kurdistan Region and oversight of its export processes and associated revenues.

Currently, the budget law stipulates an extraction cost of $6 per barrel for regional oil; however, the government’s proposed amendment suggests raising this figure to $16 per barrel.

As explained by Moanes, the draft amendment will obligate the government to cover the costs associated with extracting 400,000 barrels per day from regional oil fields. This increase in extraction costs will likely heighten the anticipated deficit within the public budget.

Jamal Koger, a member of the Finance Committee, indicated on January 7 that the financial budget schedules would be submitted in February, although he acknowledged potential delays arising from disagreements regarding Article 12.

Article 12 addresses compensations for the Kurdistan Regional Government concerning production and transportation expenditures related to oil extraction.

Furthermore, Jiay Timur, deputy from the Kurdistan Democratic Party, noted that the previous budget law’s classification of the extraction cost at $6 is disproportionately low, especially when foreign companies manage extraction at costs reaching $26 per barrel.

In June 2023, the Iraqi Council of Representatives ratified the draft general budget for the financial years spanning 2023, 2024, and 2025.

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