KRG: Equal Oil Costs Could Cut Petrol Price to 450 Dinars
KRG Natural Resources Ministry says Kurdistan's $16-per-barrel production cost must be aligned with Iraq's $4 calculation to enable a lower subsidized petrol price.
ERBIL (Kurdistan24) - The Kurdistan Region could reduce the price of petrol from 750 to 450 Iraqi dinars per liter if Baghdad agrees to equalize the cost assigned to oil production in Kurdistan with Iraq's, a senior official at the Kurdistan Regional Government's Ministry of Natural Resources (MNR) said Tuesday.
Dr. Ghazal Hostani, Director General of Contracts at the MNR, told Kurdistan24 that the production cost of a barrel of oil in the Kurdistan Region is currently calculated at $16, compared with $4 in Iraq.
She said aligning Kurdistan's cost with Iraq's calculation would allow the KRG to provide petrol to consumers at the same subsidized price offered in other parts of Iraq.
"The Ministry of Natural Resources is working around the clock to resolve the widespread petrol crisis," Hostani said, adding that the ministry is working to ease the pressure on citizens and expects the situation to stabilize in the near future.
Baghdad subsidy at center of dispute
Hostani said Iraq's refineries currently cannot produce enough petrol to meet domestic demand, prompting Baghdad to allocate a special budget to the federal Ministry of Oil to import fuel from international suppliers, including the UAE's ADNOC.
According to the MNR official, imported petrol costs more than 2,000 dinars per liter, but the Iraqi government sells it to consumers for 450 dinars, absorbing a subsidy of more than 1,500 dinars per liter.
She said the Kurdistan Region does not receive a share of that subsidy budget or the imported fuel.
"We have reached out to Baghdad through official letters, phone calls, and messages, requesting Kurdistan's share of that budget or the imported petrol," Hostani said.
The dispute comes as the Kurdistan Region faces a petrol shortage that has affected supplies and contributed to higher prices at fuel stations.
KRG seeks more crude for local refineries
Hostani said the KRG has also formally asked Iraq's Ministry of Oil to increase the volume of crude supplied to refineries in the Kurdistan Region from 50,000 to 130,000 barrels per day.
The proposal, she said, would allow Baghdad either to send additional crude for refining in the Region or permit Kurdistan to use its own crude production for domestic fuel production.
The current allocation of 50,000 barrels is divided between two refineries: 40,000 barrels for Lanaz and 10,000 for KAR.
Hostani said KAR alone has the capacity to process about 75,000 barrels per day but is operating below capacity because of insufficient crude supplies.
She also said the MNR had warned Baghdad about the potential for a fuel shortage before the current crisis emerged.
"Before this crisis fully developed, we sent 10 formal letters to Baghdad predicting this situation and asking for cooperation to prevent it, but Baghdad did not respond," she said.
Imported fuel and refinery output
Hostani said the ministry is simultaneously encouraging private companies to import petrol to help stabilize the market while discussions with the federal Ministry of Oil continue.
She also rejected claims that the Lanaz and KAR refineries are exporting petrol abroad, describing the allegations as "untrue and intended to mislead the public."
According to Hostani, the 50,000 barrels of crude currently allocated to the refineries produce approximately 1.75 million liters of petrol, all of which is distributed inside the Kurdistan Region.
She said tanker trucks transporting the fuel are fitted with surveillance cameras and are monitored by inspection teams from the refineries to fuel stations.
The MNR official said resolving the cost and supply issues ultimately depends on greater coordination between Erbil and Baghdad.
For consumers, the key issue is the price difference: petrol currently costs 750 dinars per liter in the Kurdistan Region, while the federal government subsidizes petrol in other parts of Iraq at 450 dinars.
Hostani said that if Kurdistan's oil-production cost were treated on the same basis as Iraq's, the MNR would have the financial room to offer the same 450-dinar price.
The proposal therefore links the immediate petrol crisis to a broader dispute over oil production costs, crude allocations and the distribution of federal fuel subsidies between Baghdad and Erbil.