Iraq's semi-autonomous region of Kurdistan plans to halt oil exports on August 31 if the central government does not make all outstanding payments, which could mean the proposed increase in Iraq's overall shipments to world markets will be brief.
Kurdistan said it would restart exports this week in a bid to end the payments dispute with Baghdad. The Kurdistan Regional Government says the central government has withheld payment of $1.5 billion.
Natural Resources Minister Ashti Hawrami made the statement giving the end-August deadline in a letter posted on the KRG's website and addressed to oil companies DNO, Genel Energy and Kar Group.
"What I have in mind is to restart the oil export for only one month, i.e. for all of the August period," Hawrami wrote in the letter, dated July 28.
"If the payments are not released by the end of this period, then we agree to halt all the export at the midnight of 31st August."
The Kurdistan Regional Government (KRG) and Baghdad are locked in a long-running feud over oil and land rights that have shut in exports for the past four months from the oilfields being tapped by foreign oil companies in the northern region.
Letters released on the KRG website show the companies were initially reluctant to go along with the export restart.
Genel Chief Executive Tony Hayward said in a letter to Hawrami the company had not been paid for the majority of oil exported in 2009 and 2011. "This has had a very significant impact on our operations," the letter said.
The KRG statement on Wednesday said exports would remain at 100,000 barrels per day (bpd) for a month and if payments were forthcoming, could move swiftly up to 200,000 bpd.