(MENAFN- Khaleej Times) Iraqi Prime Minister Haider Al Abadi's office said the deal was approved during a cabinet meeting also attended by Kurdish Prime Minister Nechirvan Barzani.
Under the deal, due to come into effect at the start of 2015, 250,000 barrels per day of oil will be exported from the autonomous region and 300,000 from the disputed province of Kirkuk.
"We have reached an agreement with the Iraqi government which will benefit both parties and whereby we will export 250,000 bpd of regional oil and help the federal government export the Kirkuk oil," Barzani told reporters.
The deal would see oil from the Kurdish region or claimed by its leadership exported via Kurdish pipelines but through the federal oil company.
In return, Baghdad will release the Kurdistan Regional Government's share of national revenue, which had been frozen for more than a year in retaliation for Arbil's efforts to export oil unilaterally.
It will also give a share of its military budget to the Kurdish peshmerga fighters.
"The federal prime minister has expressed his readiness to guarantee $1 billion from the Iraqi budget for the peshmerga forces," Barzani said. Al Abadi's office simply said the Kurdish military would get a percentage of the federal armed forces' budget.
The deal announced on Tuesday is an interim agreement and some outstanding issues remain to be ironed out between Baghdad and the Kurdistan government.
"We will work on a strategy to reach a comprehensive deal covering all problems with Baghdad," Barzani said, adding that the "negotiations may take six months or more."
Payments received
Meanwhile, oil producers including Genel and Gulf Keystone Petroleum, have received initial payments for oil exports from the Kurdistan Regional Government, paving the way for more steady oil revenues for producers in Iraqi Kurdistan.
Genel said on Tuesday the partners operating the Taq Taq oilfield had received an initial gross payment of $30 million from the KRG for oil exported via the KRI-Turkey pipeline.
Partners in the Tawke oil field, majority owned by Norway's DNO, are also expecting to receive a $30 million gross payment from the KRG, Genel said. The London-listed oil producer's own share of these payments is $24 million, it said.
"Payments are expected to become more regular and predictable once the KRG reaches budget equilibrium in early 2015," it added.
Shares in the companies rose after the news, with Genel up 5.4 percent and DNO gaining 4.4 percent in early trading.
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