Iraq agrees to start talks with Kurds on oil

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Iraq's prime minister agreed with the semi-autonomous Kurdistan Regional Government to start talks about crude output from northern regions that have been bypassing the central government to export oil.

Prime Minister Haidar Al-Abadi reached an agreement with KRG Premier Nechirvan Barzani during a meeting in Baghdad to start "technical talks" between the federal oil ministry and the KRG Ministry of Natural Resources, according to an emailed statement from Al-Abadi's office. The talks will focus on the production and distribution of crude from the Kurdish region and the adjacent Kirkuk area, it said.

"Iraq's prime minister stressed the necessity to boost oil output and for the Kurds to hand over oil exports from Kurdistan and Kirkuk to the federal government," Saad Al-Hadithi, spokesman for Al-Abadi, said by phone. "In return, the KRG will receive its financial dues."

The central government in Baghdad has been locked in a dispute with the KRG since 2014, when the Kurds began selling their oil independently. Iraq has struggled to raise oil exports this year, due partly to its feud with the KRG, and the new agreement could help OPEC's second-biggest producer boost northern exports, sustaining its recent increase in supply to global markets.

Iraq's new oil minister, Jabbar al-Luaibi, fed hopes when he said on Aug. 15, his first day in office, that he saw ways to resolve the dispute between the central government and the Kurds. Both sides could benefit from a deal, not least because both are short of cash after more than two years of battling Islamic State militants and weathering low oil prices.

Islamic State invaded large swaths of northern Iraq in June 2014, driving out the Iraqi central government's army. Kurdish forces then took control of nearby Kirkuk oil fields and started shipping crude from the area through their export pipeline network running to Turkey's port of Ceyhan.

Al-Abadi and Barzani also agreed on Monday to cooperate on "liberating" the northern city of Mosul from Islamic State fighters, according to the prime minister's statement.