Talks aimed at permanently resolving a dispute between Baghdad and Kurdish regional authorities over oil exports hit a snag over the weekend with Kurds saying the central government is unable to pay their region's share of the budget.
Both sides reaffirmed their commitment Monday to a temporary oil export agreement reached in December, but the Kurdistan Regional Government (KRG) said Baghdad lacked the funds to keep its side of the bargain due to financial problems.
"It became clear in the meeting that due to the financial crisis and lack of cash, the Iraqi government at this time cannot give the KRG its appropriate share of the budget as set out in the 2015 budget," a statement on the KRG website said.
A temporary agreement was reached in December whereby the KRG agreed to export 550,000 barrels per day of oil from its own fields and Kirkuk through Iraq's state marketing authority.
In return, Baghdad would reinstate budget payments to the Kurds, which it had cut early in 2014 as punishment for the region's moves to export oil independently.
Arez Abdullah, chairman of parliament's oil and energy panel, said Kurdish officials proposed that Baghdad resume initial payments.
"They are discussing now ways to reach a compromise," he told Reuters.
The December agreement was hailed as a breakthrough helping Iraq increase oil exports at a time when revenues are strained by low global prices and the cost of financing a war against ISIS militants in the north and west.
The deal enabled Baghdad to pass a budget last month for the first time since 2013.
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