Iraqi government orders probe into Kurdistan region’s oil exports

(Shutterstock)
Updated 09 January 2018
0

Iraqi government orders probe into Kurdistan region’s oil exports

BAGHDAD: The Iraqi parliament on Monday launched an investigation into the quantities of oil exported by the Kurdish regional government (KRG) during the past three years from Kirkuk’s oil fields and the Kurdish region.
It is seeking to prosecute officials involved in oil smuggling and to monitor their bank accounts inside and outside of Iraq.
KRG took advantage of the dramatic collapse of the Iraqi Army in June 2014 to drive Iraqi security forces out of the northern oil hub city of Kirkuk, its lucrative oil fields and all the nearby disputed areas. It seized control of oil exports from the area until Oct. 26 when Baghdad launched a huge military offensive to drive Kurdish forces into the Kurdish region.
KRG has been exporting an average of 400,000-650,000 bpd from Kirkuk and the fields of the Kurdish region, but exports have  halved since October as the federal government in Baghdad imposed a series of punitive measures including banning international flights from and to the region and shut down the border crossings between the region and Turkey, Iran and Syria.                     
The resolution approved by the parliament states that the investigation committee, which has to file its report in four weeks, will consist of the members of the Oil and Gas, Financial and Integrity parliamentary committees. The committees will investigate the quantities of oil exported during the period in which the fields were under the control of KRG, and the funds obtained from sales of oil, starting from July 1, 2014 until today.
“The (Kurdish region) has benefited from Kirkuk oil exports, and there are big questions relating to the revenues of oil,” Masoud Haider, a Kurdish federal lawmaker and a member of the Parliamentary Financial committee, told Arab News.
“We as the Kurdish bloc have many inquiries related to the (oil) revenues and the expenditure ... loads of oil has been exported (by KRG) but we (the Kurds in the region) do not know where the revenues go,” Haider said.
“(In Kurdistan), there are 120,000 people who receive government salaries who have not received more than a third of their salaries since 2014.”
A senior Iraqi federal oil official talking to Arab News on condition of anonymity said that the data of the federal Oil Ministry recorded in the past three years indicated that KRG had exported 800,000–850,000 bpd until October.
“KRG officials said that they were exporting just 500,000 bpd and using the rest for domestic consumption within the region,” the official said. “This is not true. 350,000 bpd is a very big amount and it is not reasonable to be used for the daily consumption in the region.”
“Our information suggest that there have been large oil-smuggling operations taking place in the region on an almost daily basis until today. They (the involved officials) used the tankers to smuggle oil of Kirkuk and the region to Turkey and Iran,” the official said.
A senior Kurdish lawmaker involved in talks between Baghdad and Kurdistan to solve issues between the two sides, including about oil, declined to be named but told Arab News that the records of the Oil and Gas Parliamentary Committee showed that oil exports carried out by KRG has dropped to 270,000–300,000 bpd since October, “but oil smuggling to Turkey and Iran has been continuing.” 
“Daily, 60,000 bpd has been smuggled by tankers to Iran and 100,000–150,000 bpd to Turkey,” the Kurdish lawmaker said.
The parliament resolution also asked the federal Oil Ministry to stop the work of “Kar” company — which has been appointed by KRG since 2014 to supervise oil exports from the Kirkuk fields to the Turkish port of Ceyhan — hand oil production in the Kirkuk oil fields to the state-owned North Oil Company (NOC) and submit all oil exports to the Iraqi Oil Marketing Company (SOMO).
“Kar” is a Kurdish oil company operating in Kurdistan. Kurdish lawmakers told Arab News that “Kar” is owned and established by Masoud Barazani, the former president of the Kurdish region and the most influential Kurdish figure in the country.
“The work of this (Kar) company in Kirkuk oil fields is unconstitutional as this is a private company and everything related to oil and gas should be under the control and supervision of the federal Oil Ministry,” A’awad Al-A’awadi, a member of the parliamentary Oil and Gas Committee, told Arab News.
“This company was appointed by the (Kurdish) regional government and KRG has no right to practice any works related to run the oil and gas in Kirkuk or anywhere else,” A’awadi said. 
Monday’s parliamentary resolution orders the Iraqi Central Bank to follow up amounts deposited in Iraqi and foreign banks as a result of the sales of oil extracted from the Kirkuk fields and the Kurdish region and present a detailed report including the amounts of money and names of officials who benefited from the sales.
“The government needs to know where the money gone, because this money were not spent in Kurdistan,” a senior federal official close to the Iraqi Prime Minister Haider Al-Abadi told Arab News on condition of anonymity.
“The Kurdish officials have admitted that they were exporting 500,000 bpd in the past three years, but they refuse to deliver any details relating to where the money went and how it was spent,” the official said.
“They were selling at prices below the price of SOMO by $6-10, in addition to the quantities of smuggled oil which they refuse to recognize,” he said.
“This file (the Kurdish officials involved in oil smuggling) cannot be closed (until there is) details about who (is involved), how much (money they got) and where (the banks accounts where the money deposited).”


Lufthansa profit warning spooks European airline sector

Updated 17 June 2019
0

Lufthansa profit warning spooks European airline sector

  • Ryanair Chief Executive Michael O’Leary last month warned of the impact of what he called ‘attritional fare wars’

FRANKFURT: Germany’s Lufthansa sent shockwaves through the European airline sector on Monday as it cut its full-year profit forecast, with lower prices and higher fuel costs compounding the effect of losses at its budget subsidiary Eurowings.
The warning follows gloomy comments last month from Irish budget airline Ryanair, which vies with Lufthansa for top spot in Europe in terms of passengers carried. Air France-KLM also reported a widening quarterly loss last month.
In a statement issued late on Sunday, Lufthansa forecast annual EBIT of between €2 billion and €2.4 billion, down from the previously targeted €2.4 billion to €3 billion.
“Yields in the European short-haul market, in particular in the group’s home markets, Germany and Austria, are affected by sustained overcapacities caused by carriers willing to accept significant losses to expand their market share,” it said.
European airlines are locked in a battle for supremacy, with a surfeit of seats holding down revenues and higher fuel costs adding to the pressure. A number of smaller airlines have collapsed over the past two years.
Lufthansa cited falling revenue from its Eurowings budget business as a key reason for the profit warning.
“The group expects the European market to remain challenging at least for the remainder of 2019,” it said.
It also pointed to high jet fuel costs, which it said could exceed last year’s figure by €550 million, despite a recent fall in crude oil prices.
Ryanair Chief Executive Michael O’Leary last month warned of the impact of what he called “attritional fare wars” and said four or five European airlines were likely to emerge as the winners in the sector.
“No signs that anyone is prepared to reduce capacity, therefore we would anticipate the wave of consolidation in European short haul is not over,” said analyst Neil Wilson, analyst at London-based broker market.com.
Earlier this month global airlines slashed a widely watched industry profit forecast by 21 percent as an expanding trade war and higher oil prices compound worries about an overdue industry slowdown.
Lufthansa’s problems are centered on its European business, with a more positive outlook for its long-haul operations, especially on transatlantic and Asian routes.
Eurowings management is due to implement turnaround measures to be presented shortly, Lufthansa said, adding that efforts to reduce costs had so far been slower than expected.
Lufthansa’s adjusted margin for earnings before interest and tax (EBIT) was forecast between 5.5 percent and 6.5 percent, down from 6.5 percent to 8 percent previously, it said in a statement.
Lufthansa also said it would make a €340 million provision for in its first-half accounts, relating to a tax matter in Germany originating in the years between 2001 and 2005.