Iraq's Kurdish region halted oil exports on Sunday after Baghdad's top energy official warned it to reconsider before following through on the threat over the government's non-payment of funds.
The move by Kurdistan is the latest in a long-running row between Baghdad and Kurdish authorities in Arbil, who have have squabbled over payments, revenue-sharing and the central government's refusal to recognise deals Kurdish officials have signed with foreign energy firms.
Kurdistan said a week ago that it had been exporting 50,000 barrels of oil, and threatened to stop exports entirely if Iraq did not hand over USD 1.5 billion Arbil said was owed to foreign oil companies working in the region. Today, Kurdistan followed through.
"After consultation with the producing companies, the ministry (of natural resources) has reluctantly decided to halt exports until further notice," the Kurdistan regional government said in a statement on its website.
"There have been no payments for 10 months, nor any indication from federal authorities that payments are forthcoming."
The statement said exports would be diverted to the local market for processing and refining.
Before the Kurdish statement was released, the national government's deputy prime minister for energy affairs warned Arbil to consider its threats and get "their act together."
"I would advise them, before they make any threat, to consider how much oil (revenue) they are getting from other parts of the country, which is much more than the oil that is being produced there," Hussein al-Shahristani said in an interview with AFP in his office in Baghdad's heavily fortified Green Zone.
Shahristani, a former oil minister, noted that Kurdistan was allocated 17 per cent of Iraq's federal budget, but said it provided a smaller proportion of Iraqi oil exports.
He said the region was also not living up to its promises on crude output.
"This is in breach of their commitment in the 2012 budget: the Kurdish region is required to hand over 175,000 barrels per day (bpd). Otherwise... they will bear the consequences if that level is not met, and there should be a financial compensation to the ministry of finance," he said.