Aug. 29 (UPI) -- The federal Iraqi government can't distribute oil products to the Kurdish north of Iraq because it can barely satisfy its own demand, a ministry official said.
Ali Sabah, identified by the Iraqi news outlet Rudaw as an official in the Iraqi Oil Ministry, said the federal government lacks stocks of gasoline and diesel to distribute.
"There is no agreement between the oil derivatives department from the Iraqi Oil Ministry with the Kurdistan Region to send gasoline and diesel to them," he told Rudaw. "The amount we possess does not suffice even for us and we cannot send gasoline to any other place."
The semiautonomous Kurdistan Regional Government controls many of its own affairs in the northern provinces. The KRG has a payment arrangement for a share of the national oil revenue and the federal government has agreements to supply the north with limited amounts of heating oil, Sabah said.
The federal government establishes a set rate for consumer fuel prices, while the KRG uses a free market system.
Iraq is the second-largest producer among members of the Organization of Petroleum Exporting Countries, behind Saudi Arabia. It exported about 625 million barrels of oil during the first half of the year, compared with 592 million barrels over the same period in 2017.
The Kurdish region produces oil that it sends across the border for exports from a Turkish sea port. A pipeline runs north from Kirkuk, though it was damaged so badly by Islamic State militants that parts of it need to be rebuilt.
Both regions have faced their own sets of security and internal political issues. The Kurdish region has been rocked by the fight against the Islamic State terror group, while southern Iraq has been the scene of protests over the lack of basic services.