Where is the Kurdistan Region’s oil money?

The issue of oil and its related income is one of several mysteries surrounding the Kurdistan Region of Iraq. There are many things that remain unknown to the people of the region itself. Berhem Letif from RojNews has carried out thorough research to figure out where the oil money of the Kurdistan Region goes, and in the process has uncovered the link between the oil money of the region and the Turkish Halkbank.

But first it is important to ask two questions. What happens to the oil income of the Kurdistan region? And what is its monetary value? In order for these questions to be answered, it is important to have a close look at the volume of oil sold by the region and its revenues.

On 14 October 2013, the Kurdistan Regional Government (KRG) began the export of oil independently from the Iraqi central government. Until 1 September 2018, its oil export volume was as high as 741,273,592 barrels.

If we assume that the region’s revenue from each barrel was only 30 US dollars, its total revenue until 2018 would be $22,238,207,760.

According to a report by the British Deloitte company, the KRG has sold 293,554,548 barrels of oil from 2018 to 2019. The total revenue for these two years amounts to more than 14 billion USD.

Based on these figures, the KRG has earned $36,590,207,760 from 2013 to 2019.

This money does not include the cash revenues that the KRG has acquired by selling oil through various channels. According to a 2015 report published by the Financial Times, the region has sold hundreds of millions of barrels of oil since May 2014 through unofficial channels over trade networks. Among the people in this network is a person named Murtaza Lakhani, a Pakistani broker, who has been managing the logistics of the region’s oil for the Ministry of Natural Resources of the KRG since 2014.

According to the report, Lakhani receives a monthly salary of $1m from the Ministry of Natural Resources, in addition to the income he earns from the region’s oil. About 60 percent of the region’s oil revenue goes to companies.

Sarkawt Shamsaddin, a Kurdish MP in the Iraqi parliament and member of the Finance Committee of the parliament, pointed out that 60 percent of the Kurdistan region’s oil revenue is spent for extraction and transportation of the oil, while the Iraqi government spends only 20 percent on the process of extraction.

The oil revenue of the Kurdistan Region was $8,438,601,000 in 2019. Of this amount, $4,515,421,000 remained for the government, and the rest went to the debts of Turkish companies.

According to the 50-year agreement between Turkey and the Kurdistan Region, the management of the oil pipelines, gas sales, oil trade, the mechanism for carrying out trade with oil revenues, and the management of oil wells would be carried out by the Turkish energy companies.

According to the same agreement, the Turkish energy company (TEC) would work with the American company ExxonMobil in 13 oil fields in the Kurdistan Region. It would also own the majority of the shares in seven oil wells in the region. These fields are Palkane, Khurmala Handiren, Choman, Khalakan, Arbat, and Jabal Qand.

According to a report by Deloitte, Turkey has earned one billion from the Kurdistan Region’s oil sales revenue in 2019, receiving money from the region in two ways. As stated by the report, the Turkish oil company receives $3.17 in customs duty for the shipment of every barrel. The money it has received as customs duty in 2019 amounts to $494,186,315.

In 2019 the KRG allocated $610,362,000 for its debts to the Turkish oil company and the Turkish international oil company. In other words, for every barrel of exported oil from the region, $3.85 has been paid to these two companies.

What this means is that the Turkish government has earned $1,104,000,000 from the Kurdistan Region’s oil revenues in 2019 alone.

Hidden revenue of the Kurdistan Region’s oil in Turkey

At the beginning of the independent economy announcement, the KRG declared that it would transfer the revenues from the sale of the region’s oil to the HalkBank of Turkey. But the Turkish president, in a meeting with the former Iraqi Prime Minister Haider Al-Abadi, revealed something more secretive about the region’s oil revenues.

Sarkawt Shamsaddin said: “In 2018 we went to Haider Al-Abadi and he told us about his meeting with [the Turkish President Recep Tayyip] Erdogan and said, ‘I told Erdogan that I knew that the [Kurdistan] Region’s oil money was held in HalkBank. Erdogan said no, only the salaries of the government employees are held in HalkBank. I can tell you the names of five or six other banks that contain the oil money of the Region and that money is the private money of the officials of the Region'”.

13 billion dollars is missing.

Previously, RojNews had reported at length the revenue that the KRG had received during the Eighth Cabinet (of the KRG). According to that report, the Regional Government earned $45,806,404,760 from 2014 to 2018 from oil sales, domestic revenues, aids from allied forces, and oil pipeline money.

Of this amount, $29,707,500,000 was given to government employees. In addition, $2,706,000,025 has been allocated for the expenses of the ministries of the Regional Government. This is due to the fact that the ministries need 65 billion Iraqi dinars [nearly 55 million USD] per month.

As the Kurdistan Region has been selling its oil in various ways since 2014, from the amount mentioned above $13,392,292,760 is missing. This comes at a time when the region’s officials say that the region is $28bn in debt.

What happened to the revenues of the region, especially those of the region’s oil? Why is the Kurdistan Region still in debt despite the increase in revenues?

The Kurdistan Region MP Dr. Sherko Jawdat spoke to RojNews about these issues and said: “This revenue goes to corruption, to those 802 local companies that operate in the oil and gas sector in the Kurdistan Region. This revenue goes to those who work at the border gates and smuggle goods into Kurdistan without customs clearance and quality control”.

A number of the 32 MPs of the Parliament of Kurdistan from various parties other than the Kurdistan Democratic Party (PDK) demanded that the parliament convene a special session on 18 November regarding the 50-year-old agreement with the Turkish state to reveal the region’s oil revenues and the content of the agreement. They also demanded that the relevant factions of the government take part in the meeting to clarify the issue.

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Where is the Kurdistan Region’s oil money?

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